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« The corporate investigations list (January 2013) | Main | Hewlett-Packard's latest FCPA disclosure (December 2012) »
Thursday
Jan032013

China releases new judicial interpretation on bribery enforcement

China’s top judicial authorities released a new interpretation last week on how certain bribery crimes are to be enforced.

On December 26, 2012, China’s highest court, the Supreme People’s Court, and its top prosecutorial body, the Supreme People’s Procuratorate, issued the “Interpretation of Several Issues Concerning the Specific Application of the Law in the Handling of Criminal Bribery Cases” (“the Interpretation”). The Interpretation, which carries the force of law in China, became effective on January 1, 2013. An unofficial translation by Covington & Burling is available here.

The Interpretation, which focuses on enforcement against bribe-givers, does not significantly alter the substantive legal requirements and prohibitions regarding bribery and corruption. The Interpretation does, however, clarify certain aspects of PRC law and provides clarification of benefits for voluntary disclosure by corporate entities. The Interpretation also suggests areas of particular enforcement focus, such as the life science industry.

The same two agencies in 2007 issued a similar interpretation for handling bribe-taking cases, and the current Interpretation may be part of a broader effort to prosecute individuals and entities that give bribes to government officials, which historically have been prosecuted less frequently than government officials who take bribes.

The Interpretation clarifies that, with certain exceptions, punishment against a corporate bribe-giver can be mitigated or waived if the company “voluntarily confesses” its bribe-giving activities. A bribe-giver can similarly be eligible to have punishment mitigated or waived if it reports on other, non-bribery related crimes of a bribe-taking state functionary.* This leniency for voluntary disclosure, however, is not available in certain circumstances, such as when bribes are offered to more than three persons, or when the bribery results in “harmful consequences” (not further defined).

(*Under the PRC Criminal Law, the term “state functionary” includes (1) personnel engaged in “public duties” within state agencies; (2) personnel engaged in “public duties” in state-owned companies, enterprises, institutions and people’s organizations; (3) employees who are assigned by state organs, state-owned companies, enterprises, and institutions to perform “public duties” in non-state-owned companies, enterprises, institutions and social organizations; and (4) other personnel engaged in “public duties” in accordance with the law.)

The Interpretation reiterates an earlier document issued by the same agencies in 2000 that giving bribes of more than RMB 10,000 (about US $1,600) to state functionaries will lead to criminal prosecution. The Interpretation establishes that giving bribes of more than RMB 200,000 (about $32,000) will be deemed to be “serious” (and thus resulting in more serious punishment). A bribe of less than RMB 200,000 can still be deemed to be “serious” in some circumstances, such as if given to a state functionary in certain government agencies, such as the State Food & Drug Administration and its local affiliates or Environmental Protection Bureau, and where the bribe “seriously harms” the public interest or endangers lives or property.

The Interpretation also states that illegal property interests obtained through bribery are to be returned to the victim. (This appears to refer to situations where property developers bribe government officials to obtain land illegally and in violation of the rights of current occupants.) Other benefits obtained improperly, such as license and certifications, are to be handled according to “applicable regulations,” which in many cases allow for licenses or certifications to be canceled if obtained through bribery.

The Interpretation does not, however, offer any specific guidance on the 2011 amendment to the PRC Criminal Law that criminalized bribes to non-Chinese government officials. (See related posts here and here.)

_________

Eric Carlson is a contributing editor of the FCPA Blog.

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