ETHIC Intelligence hosts second annual international conference
on corruption prevention Standards and Guidelines


OECD Conference center, Paris, Monday September 11, 2017

ETHIC Intelligence was very pleased to host its second annual international conference on Standards and Guidlines: Recent developments in Anti-Corruption Compliance on September 11, 2017 at the OECD conference centre in Paris. You can now view photos and video from the conference where experts from business, civil society and government exchanged and debated on how best to progress in the fight against corruption.

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What are the Implications of the new China Guidance on anti-bribery enforcement?

Jingzhao-Tao-expert             Jingzhou Tao, Managing Partner Asia Practice Development, Lawyer Paris Bar Dechert LLP Beijing

Gregory-Louvel-expert               Gregory Louvel, Lawyer, Paris Bar, Solicitor of England and Wales Dechert LLP Beijing

Christina-Wang

        Emilie Hu,

Lawyer Paris Bar,

Dechert LLP Beijing

 

Judge Bao was a much-praised official in ancient China who was particularly known for his strong position against bribery. In fact, he had thirty high officials demoted or dismissed for corruption, bribery, or dereliction of duty, and before his death, he warned his family: “Any of my descendants who commits bribery as an official shall not be allowed back home nor buried in the family burial site. He who shares not my values is not my descendant.” Today, Judge Bao is still revered as the symbol of justice in China.  

In keeping with the tradition of Judge Bao, the Supreme People’s Court (the SPC) and the Supreme People’s Procuratorate (the SPP) of the People’s Republic of China (PRC) issued the Interpretation of Several Issues Concerning the Specific Application of the Law in the Handling of Criminal Bribe-Giving Cases (the Interpretation) on 26 December 2012. The Interpretation came into force on 1 January 2013 and it introduced welcomed clarifications in some grey areas of the PRC’s anti-bribery laws.    
What was the motivation for the release of the Interpretation?

The release of the Interpretation comes as part of a wider scheme whereby the newly appointed top leadership of the PRC has called for cracking down on “tigers” (high-ranking officials) and “flies” (ordinary people, petty bureaucracy and low-ranking officials). In the wake of such policy, several senior regional officials in Guangdong and Shandong provinces have been facing corruption charges since October 2012 and the 18th Congress of the Communist Party.    

What are some of the clarifications to be found in the Interpretation?

The Interpretation has shed some light on Article 390 of the PRC Criminal Law, which provides that:

“Whoever commits the crime of offering bribes is to be sentenced to not more than five years of fixed-term imprisonment or to criminal detention; whoever offers bribes to seek improper gain, where the circumstances are serious, or causes great damage to state interests, is to be sentenced to not less than five years and not more than 10 years of fixed-term imprisonment, or to not less than 10 years of fixed-term imprisonment or life imprisonment where the circumstances are extremely serious, and in addition, may face confiscation of property. Before prosecution, offenders who have taken the initiative to admit their crime may receive a lighter punishment or be exempted from punishment.” (emphasis added).

Are there any clarifications which are particularly useful for companies doing business in China?

 The Interpretation introduced welcomed clarifications in the sense that:

  • It sets a minimum threshold of RMB 10,000 [approx. USD 1,600] as the trigger for criminal liability under Article 390. That this amount is rather low shows the commitment on the part of PRC authorities to increase their control on bribe giving.
  • Various standards of seriousness are established. Thus a “serious case” arises when the value of the bribe is between RMB 200,000 [approx. USD 32,000] and RMB 1 million [approx. USD 160,000], or, under certain circumstances, when it is between RMB 100,000 [approx. USD 16,000] and RMB 200,000 [approx. USD 32,000]. “Extremely serious cases” are classified according to the following criteria: (i) the value of the bribes is more than RMB 1 million [approx. USD 160,000], or, under certain circumstances, between RMB 1 million [approx. USD 160,000] and RMB 500,000 [approx. USD 80,000]; (ii) bribes are offered to government officials working in administrative enforcement and judicial departments; and (iii) losses caused by the bribes exceed RMB 5 million [approx. USD 800,000].

It is noteworthy that in order to ensure that a large number of small bribes fall within the scope of the PRC anti-corruption laws, the value of the bribes can be cumulated when the charges concern several bribes. Charges can also be cumulated when a briber has acquired bribes in breach of the law, such that he will be charged for both (i) such criminal offence and (ii) the act of bribery itself.

  • An “improper gain” occurs when benefits for the briber are in breach of PRC regulations or when a government official is requested to break PRC regulations to provide assistance in obtaining such improper gains. What is noteworthy is that the concept of improper gain is not limited to illegal profits, but also encompasses illegitimate profits. Thus any competitive advantages in violation of the principles of justice and fairness are deemed improper gains as well. This could, for example, cover situations where one uses confidential information provided by a PRC official to realize a gain in the stock market. Additionally, the Interpretation specifies that unlawful gains shall be recovered, compensated to, or returned to the victim of the bribery.

 

  • A loss caused by bribery of a value over RMB 1 million [USD 160,000] is considered as “great damage to state interests”. This clarification is intended to address any situation in which the amount of the bribes either cannot be determined, or is between RMB 10,000 [approx. USD 1,600] and RMB 100,000 [approx. USD 16,000], but which causes losses exceeding RMB 1 million [USD 160,000].

 

  • While Article 390 of the PRC Criminal Law allows a remote form of “plea bargain”, the Interpretation has set up precise conditions under which a briber’s liability may be exempted, moderated or mitigated. Indeed, the incentive appears strong for the briber to confess to act of bribery before the prosecution is open. In this way, the briber may see his liability mitigated or exempted, whereas he cannot be exempted from his liability if he confesses after the prosecution has opened. However, the strongest incentive appears when, irrespective of whether the briber has already been prosecuted, the bribe-giver denounces the criminal offenses committed by the bribe-receiver (other than the act of receiving the bribes). By so doing, his liability can be moderated, mitigated or exempted. However, such mechanism is limited to a handful of cases, and the plea bargain does not apply in the following circumstances: (i) where more than three persons are bribed; (ii) the consequences resulting from the bribery are harmful; (iii) the briber has been imposed criminal and administrative penalties; and (iv) the bribe’s purpose is to commit a criminal offence.
Generally speaking, how would you characterize the usefulness of the Interpretation?

The Interpretation serves as an extremely useful tool to determine the scope and application of Article 390 of the PRC Criminal Law. However the breadth of the Interpretation is still narrow and many issues still hamper the development of a comprehensive Chinese legal framework against bribery that would be similar in substance to standards applied by US or UK authorities. Recently, we have observed that with rising public anger towards corruption by public officials and the monitoring of their activities online, the tolerance threshold for corruption is getting lower in China. We are optimistic that with such social pressure, more wrong-doers will be encouraged to incriminate corrupt officials in the future. Beware, whether tigers or flies, Judge Bao is now watching!

February 2013

Tags : China guidance on anti-bribery, Dechert, Jingzhou Tao, anti-corruption enforcement
 




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