On April 29, 2012, Reuters posted an article written by Jason Stubler entitled, “For Businesses in China, a Minefield of Bribery Risks”, (www.reuters.com/article/2012/04/30). In his article Mr. Stubler writes:
“Foreign companies doing business in China must navigate a business culture in which bribery is rife, finding ways to remove obstacles to expanding in the world’s second-largest economy without running afoul of local or home-country laws.
Especially in areas such as dealing with local officials in charge of permits, it is still common for bribes, whether cash or illegal gifts, to be expected in return for providing the necessary approvals, industry and legal experts say.
For U.S. companies in particular, that means they need to take pains not to run afoul of the Foreign Corrupt Practices Act (FCPA), which bars U.S. firms and others from paying bribes to officials of foreign governments.”
Stubler goes on to say:
“One specific issue in China is that with so many companies and institutions owned by or linked to the state, there are many people who could be considered government officials under the FCPA who would not be in other countries.
Even doctors at state-run hospitals or employees of state-owned enterprises (SOEs) can be deemed government officials for the purposes of the FCPA, legal experts say.
“It’s very tough, because there are so many quasi-governmental institutions, SOEs and government officials involved in the process of doing business,” Utterback said.
Beyond bribery cases that might gain attention from U.S. authorities, companies also face an uphill battle in preventing commercial bribery, although it is banned by local laws.
Such practices are widespread in areas such as procurement, with people in charge of spending decisions in local companies or government agencies often expecting kickbacks, industry participants say. Some say the problems are worse in less-developed areas of China.”
Clearly it behooves individuals and companies who want to do business in
China to know what the laws pertaining to bribery are and then conduct their business practices accordingly. Do your research before you venture ahead with your plans.
Currently China is actively pursuing policies designed to curb bribery and corruption. An article posted on the Wall Street Journal’s “Market Watch” (http://articles.marketwatch.com/2012-05-02/commentary/31520562_1_bribery-anti-corruption-check-companies) on May 2, 2012 entitled, “China’s Fight Against Bribery and Corruption; Walking the Fine Line of Cultural Courtesies and Unethical Behavior” by Shan Nair reports:
“Stringent anti-bribery laws such as the U.S. Foreign Corrupt Practices Act (FCPA) and its U.K. counterpart, the U.K. Bribery Act 2010, which prohibit companies from paying bribes to foreign officials, are being enforced with criminal prosecution and heavy penalties for those indicted. Yet corruption scandals involving multinational companies are still grabbing headlines.
Last year China’s highest national agency, the Supreme People’s Procuratorate (SPP), investigated 25,000 bribery cases.
Among the ways that China is attempting to take a tougher stance on corruption is by opening access to its centralized database of bribery convictions. This measure, recently enacted by the SPP in partnership with other state anti-corruption agencies, allows for the public disclosure of a repository of individuals and companies convicted of bribery offenses.
Companies expanding to China or hiring representatives in China must have a thorough insight into the legal landscape of Chinese anti-corruption laws which would determine the assessment of bribery risk, mitigation strategies and reactive measures if an issue were to arise.”
Chinese officials are taking an ever tougher stance on bribery. Allegations of bribery, and prosecutions for bribery are garnering more headlines and public condemnation than ever before. It’s not ‘business as usual” in China any more.
Hawkeye in China
– LEX SMITH