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China's Clean Up Continues

One of China's top corruption fighters this week was given a suspended death sentence after being convicted of corruption.

Wang Huayuan, 62, was charged with taking bribes while serving as secretary of the provincial commissions for discipline in Guangdong and Zhejiang provinces between 1998 and 2009. The bribes amounted to 7.71 million yuan (about $1.13 million).

He was arrested last year, expelled from the Communist Party, and all of his personal property was confiscated. He was sentenced by the Intermediate People's Court in Shandong.

The official Xinhua News Agency said Wang's death sentence was suspended for two years, which usually results in life in prison.

In return for bribes, the court said, Wang "dispensed favorable treatment that helped others in business, employment, litigation and in avoiding arrest."

His arrest came amid China's biggest anti-corruption campaign, which the government said has resulted in 256,000 arrests.

Wang was one of eight ministerial-level officials investigated during last year's sweep, according to Xinhua. The others included the former vice president of the supreme court, Huang Songyou, who was sentenced on January 19 to life in prison for taking bribes and embezzlement, and the former vice president of the state-owned China Development Bank, Wang Yi, who received a suspended death sentence on April 15 for taking bribes.

In August last year, China executed the former head of Beijing airport's management company. Li Peiying, 62, was convicted of accepting almost $4 million in bribes and embezzling about $12 million in public money since 1995. He headed Capital Airports Holding Co., the operator of more than 30 airports in nine provinces with 38,000 employees.

Earlier this year, China's Ministry of Commerce said that over the past three decades, about 4,000 corrupt officials had fled to Canada, the United States, Australia, and other countries, taking with them more than $50 billion in China's public funds.

*     *     *

Hewlett-Packard's Troubles. HP's disclosure in its latest 10-Q indicates the investigation into possible corruption overseas is spreading.

It said:

The German Public Prosecutor's Office ("German PPO") has been conducting an investigation into allegations that current and former employees of HP engaged in bribery, embezzlement and tax evasion relating to a transaction between Hewlett-Packard ISE GmbH in Germany, a former subsidiary of HP, and the Chief Public Prosecutor's Office of the Russian Federation. The €35 million transaction, which was referred to as the Russia GPO deal, spanned 2001 to 2006 and was for the delivery and installation of an IT network. The German PPO has recently requested information on several non-public sector transactions entered into by HP and its subsidiaries on or around 2006 involving one or more persons also involved in the Russia GPO deal.

The U.S. Department of Justice and the SEC have also been conducting an investigation into the Russia GPO deal and potential violations of the Foreign Corrupt Practices Act ("FCPA"). Under the FCPA, a person or an entity could be subject to fines, civil penalties of up to $500,000 per violation and equitable remedies, including disgorgement and other injunctive relief. In addition, criminal penalties could range from the greater of $2 million per violation or twice the gross pecuniary gain or loss from the violation. The U.S. enforcement authorities have recently requested information from HP relating to certain governmental and quasi-governmental transactions in Russia and in the Commonwealth of Independent States subregion dating back to 2000.

HP is cooperating with these investigating agencies.

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