By Sullivan, Kyle
The China Business Review , Vol. 38, No. 4
US and PRC government officials have been paying closer attention to US companies' business activities in China, as regulators in both countries have stepped up anticorruption measures in recent years. Officials from the US departments of Justice and State and the Securities and Exchange Commission (SEC) traveled to China this summer to meet with their counterparts from the PRC Ministry of Supervision to strengthen bilateral cooperation in the battle against corruption. The discussions focused on how the United States has implemented and enforced the US Foreign Corrupt Practices Act (FCPA) and encouraged the PRC government to improve enforcement of its own rules and regulations that govern corruption.
China strengthens rules against corruption
Amid these bilateral discussions, the PRC government has been improving Chinas anticorruption rules. In February, the Standing Committee of the National People s Congress revised the PRC Criminal Law to prohibit PRC-based companies and individuals from bribing foreign government officials. Loosely modeled after Article 16 of the United Nations Convention against Corruption and the antibribery provisions of the FCPA and UK Antibribery Law, the amendment forbids the act of giving "money or property" to any foreign government or public international organization official in exchange for receiving an improper commercial benefit. PRC judicial opinions - including the 2008 Opinions on Application of the Law in Commercial Bribery Cases - have defined "property" as any tangible or intangible good that can be quantified with a monetary value, such as gift cards, travel expenses, and meals. Penalties for violating the PRC Criminal Laws antibribery provisions can include imprisonment or detention of up to three years, depending on the amount paid in bribes, as well as financial penalties.
Investigations result in significant fines
The US Department of Justice (DOJ) and the SEC, the regulatory bodies that enforce the FCPA, have initiated more investigations of US companies in China in recent years. Though it is difficult to quantify the increase in cases levied against US companies in China, DOJ and SEC have charged 25 companies and more than 50 individuals worldwide since 2009, according to statistics compiled by law firm Paul, Hastings, Janofsky and Walker LLP. Those figures starkly contrast with the number of convictions during the first 20 years after FCPAs enactment in 1977. During that time, only 17 companies and 33 individuals were prosecuted for FCPA violations. …