China -  Chinese law firm

How does the definition of officials affect China?

FCPA enforcement actions in China show how U.S. authorities have liberally interpreted who qualifies as a foreign official. For example, physicians working at state-owned hospitals qualify as government officials under the FCPA. AGA Medical was charged with making corrupt payments to physicians at state-owned hospitals in China so that the hospitals would purchase its medical devices. Diagnostic Products Corp. faced FCPA charges for similar conduct. Employees at state-owned oil companies and steel companies also qualify as "foreign officials." In 2009, Control Components, Inc. ("CCI") pleaded guilty to violating the FCPA's anti-bribery provisions by making corrupt payments to employees at the China National Offshore Oil Company. Similarly, Schnitzer Steel Industries and its South Korean subsidiary ran afoul of the FCPA when they made corrupt payments to employees of government-owned steel mills in South Korea and China. Journalists in China may also be considered "foreign officials." In a 2008 opinion procedure release, the U.S. Department of Justice ("DOJ") assumed that journalists working for state-run media outlets in China fall under the FCPA's definition of "foreign official." The Chinese government's broad ownership and control of commercial enterprises qualifies a significant percentage of the country's workforce as "foreign officials" under the FCPA, which magnifies U.S. companies' compliance challenges.

 Indeed, the Chinese government is thought to own more than 70% of the country's productive wealth, and it is the majority shareholder of 31% of publicly listed companies. According to one observer, the Chinese government "wields power through the allocation of massive state resources and effective control of large-scale SOEs (state-owned enterprises), which continue to dominate key sectors of the economy." The state also controls major banks. In total, state-owned and state-held enterprises account for approximately one half of all urban investment in fixed assets. The central government exercises control over these enterprises through the State-Owned Assets Supervision and Administration Commission ("SASAC"). SASAC has authority over nearly 150 enterprises, including China's five large electricity conglomerates.68 In 2007, the SASAC enterprises earned approximately one trillion yuan, which is about 4% of the Chinese GDP.

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