China Broadens Crackdown on Corruption

China’s amended anti-bribery law went into effect last year.

Sammy Fang

Sammy Fang

And the amendments are “a strong indication of the Chinese government’s determination to crack down on corruption since President Xi Jinping took office in November 2012.”

That’s according to a recent report from DLA Piper partners Sammy Fang, Karl Buch and Bing Ryan.

“The Ninth Amendment to China’s Criminal Law, introducing a new bribery offense and revising anti-bribery and anti-corruption (ABAC) provisions of the law, is now in effect,” they wrote. “The ABAC provisions are much wider in coverage than the last set of amendments made to the PRC Criminal Law in 2011. With the Chinese Communist Party’s Central Commission for Discipline Inspection (CCDI) having just published its high-level findings from its most recent disciplinary inspection of over 50 state-owned enterprises (SOEs), together with a host of high-level investigations against and detentions of senior government officials in the past year, the revisions introduced by the Amendment are a strong indication of the Chinese government’s determination to crack down on corruption since President Xi Jinping took office in November 2012. “

Karl Buch

Karl Buch

“The new revisions extend the scope of criminal liabilities for ABAC offenses under the Criminal Law, and, in doing so, address many key issues that have emerged in recent years.”

The amendment creates a new criminal offense for bribe givers.

“In the past, there have been a strong debate among Chinese academics and lawyers as well as the general public about State Work Personnel (SWPs) abusing their positions (whether within SOEs or in government agencies or authorities) to obtain improper benefits, either directly or indirectly through their relatives or associates,” the DLA Piper partners wrote.  “To address this concern of the general public, the Amendment introduces a new offense —  offering bribes to the immediate relatives of  SWPs or individuals who have close relationship with SWPs.  This offense also covers offering bribes to former SWPs, their immediate relatives or individuals with whom they have close relationships.”

The new revisions also imposes monetary fines against individual bribe givers.

“Before the amendment, monetary fines were usually imposed on entity offenders,” they wrote. “Individual offenders were only fined when they offered a large bribe or bribes, to a company employee, a foreign official performing official duties or an official of an international public organization. In contrast, the amendment imposes criminal monetary fines against individual offenders, regardless of circumstances. It also imposes monetary fines for individuals in charge of entities or directly responsible for corrupt activities.”

Bing Ryan

Bing Ryan

They report that “the pace of change in China’s regulatory landscape is showing no signs of slowing down.”

“Since the end of 2012, when President Xi came to office, 22 senior provincial-level government officials have been put through criminal trials, with 13 having been convicted of bribery-related offenses,” they wrote. “The CCDI will continue with its next round of inspections against major SOEs starting later this year, targeting principally those in the financial services sector.  The introduction of the revisions to the ABAC provisions under the Amendment is likely to spur greater enforcement action by Chinese authorities in the near future.  There are indications that this is a genuine attempt by the Central Government to tackle bribery and corrupt practices that are endemic within the local business environment, and not just a campaign against targeted officials and SOEs.”

“How widely the current enforcement actions will spread across the private sector is anyone’s guess. There are likely watershed changes in business culture and practices to come.  Companies operating and conducting business in China should bring greater resources to bear on their compliance capabilities, enhancing their compliance programs and internal controls as they look to reduce their potential risk exposure.  No company can afford to be complacent.”

 

Copyright © Corporate Crime Reporter
In Print 48 Weeks A Year

Built on Notes Blog Core
Powered by WordPress