China considers banning officials from receiving monetary gifts
Friday, October 3, 2014 at 7:28AM
Eric Carlson in CCriminal Law of the People’s Republic of China, China, Gift Giving

Draft amendments to China’s Criminal Law currently under consideration would subject government officials who receive certain money or property to criminal penalties.

The current version of China’s Criminal Law prohibits government officials from receiving “money or property” (财物) -- or other parties from providing money or property to officials -- only when an official takes advantage of one’s position to solicit money or property from others, or illegally accepts money or property from others, in order to seek “benefits” for others (see Articles 385 and 388).  Thus, the current prohibition contains an explicit “quid pro quo” element.

Some officials under prosecution have focused on the quid pro quo element of the law, arguing that their receipt of money/property was not for the purpose of providing an advantage to the giver, and/or did not affect their duties as a public servant, and therefore was not bribery under the Criminal Law. (Note that such conduct may violate internal Communist Party rules against receipt of such gifts, even if does not violate the Criminal Law.)

The draft amendment would create a new criminal offense of officials accepting gifts (收受礼金罪) where the amount is “relatively large,” and would apply regardless of whether it can be proven that the official provided anything in return to the giver.  Thus, the new law would appear to serve as an outright prohibition on gratuities.It is not clear what “relatively large” means in this context -- or if it will be defined at all in the draft amendment.  It also is not clear what punishment the new offense would carry.  Some commentators have noted that if the new gift-receipt offense carries a lighter punishment than preexisting bribery offenses, an official under prosecution might argue for the application of the lighter gift-receipt offense by arguing that the money was a “gift” rather than a “bribe.”

The draft amendment would not appear to create direct criminal liability for the provider of the gift.  (As we have experienced with several clients, however, an indicted corrupt government official sometimes names during a public hearing the person or company who provided the payment, causing significant reputational damage, even if the giver ultimately is not charged criminally for making the payment.) 

(Note that existing Article 394 of the Criminal Law, which focuses on embezzlement, subjects government officials who do not hand over gifts received in the course of their official duties to their agency to criminal penalties.  One assumes that the “money and property” targeted by the draft amendment are not being given “in the course of official duties.”)

The details of the draft amendment have not been released; they are expected to be released in the coming months as part of a broader slate of amendments to the Criminal Law (the “Ninth Amendment”), which requires approval by the National People’s Congress or its Standing Committee. (For details on bribery-related amendments included in the Eighth Amendment to the Criminal Law, enacted in 2011, see post here.)

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Eric Carlson, a contributing editor of the FCPA Blog, is a partner at Covington & Burling LLP. He specializes in anti-corruption compliance and internal investigations, with a particular focus on China and other regions of Asia. He speaks Mandarin and Cantonese and can be contacted here.

Article originally appeared on The FCPA Blog (https://www.fcpablog.com/).
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