Anti-Bribery Case in China a Wake-Up Call

By Anderson, Gary D.; Goodwin, David P. | National Defense, July 2010 | Go to article overview

Anti-Bribery Case in China a Wake-Up Call


Anderson, Gary D., Goodwin, David P., National Defense


* The recent Rio Tinto case in China is a powerful reminder why a vigilant and robust Foreign Corrupt Practices Act of 1977 (FCPA) corporate compliance program is important.

The FCPA imposes civil and criminal penalties on U.S.-listed companies and individuals for bribing, or offering to bribe, foreign government officials.

On March 29, a Shanghai court sentenced four employees of British-Australian mining conglomerate Rio Tinto to 10 to 14 years in prison for accepting bribes and stealing commercial secrets. The court stated that the employees took money from private Chinese steelmakers in exchange for supplying iron ore at better prices than from state-owned steel mills. The court further held that the defendants illegally obtained confidential information from executives of a major Chinese steel-maker which detailed China's negotiating position in iron ore price discussions and the production plans of key Chinese steel-makers, and then passed that information to Rio Tinto.

The Rio Tinto verdict comes as multinational companies encounter increasingly strict oversight into their worldwide operations, with the United States, China, other industrialized nations and developing countries all expanding anti-corruption enforcement.

In this environment of intense regulatory scrutiny, U.S. companies seeking to do business in China and other foreign markets must understand the FCPA. In general, the act bars companies and their agents from bribing foreign government officials. It consists of anti-bribery provisions and accounting provisions.

Under the anti-bribery provisions, any issuer--a corporation that has issued registered securities or is otherwise within the jurisdiction of the Securities and Exchange Commission--domestic concern or foreign person in the United States is barred from paying money or giving anything of value to a "foreign official" to obtain or retain business. The person making or authorizing the payment must have corrupt intent, and the improper payment must be intended to induce the foreign official to misuse his position to wrongfully direct business to the payer. The FCPA exempts "facilitating payments," but the burden of establishing the elements for this defense is on the payer, requiring a robust system of authorization and documentation.

The FCPA's accounting provisions apply only to "issuers" and have two sections: "books and records" and "internal controls." These requirements bar accounting practices that could conceal corrupt payments. Mere negligence is sufficient to violate the accounting provisions.

In January, the SEC announced the creation of a unit focused exclusively on anti-bribery enforcement, using tactics such as targeted sweeps and industry-wide investigations. One week after this announcement, in the largest single investigation and prosecution against individuals in the FCPA's history, 22 executives were indicted in a high-profile "sting" operation at an arms industry trade show in Las Vegas. These executives were charged with scheming to bribe foreign officials. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Anti-Bribery Case in China a Wake-Up Call
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.