China Increases Anti-Bribery Penalties

China Increases Anti-Bribery Penalties

Anti-Corruption and Anti-Bribery are concerns worldwide. China is increasingly getting serious about cracking down on bribes and official corruption. Along these lines, China passed a new amendment to the Criminal Code in November 2015. The amendment generally increased penalties for bribe-givers and expanded the scope of potential criminal liability, but some ambiguities remained.

Recent regulatory guidance jointly issued by the Chinese Supreme Court and the Chinese Supreme Procuratorate is attempting to remove these ambiguities. According to a new Judicial Interpretation issued on April 18, 2016, criminal penalties are set for bribes to government officials of at least RMB 30,000.

There had previously been ambiguity as to whether situations such as fee provision of services would fall within China’s definition of bribery. The Interpretation clarifies that the law applies to intangible benefits such as provision of services, offering club memberships, and debt forgiveness.

Previously a official beneficiary of a gift that went to a relative or friend could avoid penalties by denying any prior knowledge or intent to accept such a bribe. The new Interpretation specifically eliminates this as a potential defense. Further, the Interpretation does not allow a defense to bribery in the circumstances where the bribery funds were subsequently donated to charity or used for official purposes.

Foreign companies operating in China should be aware that in addition to obligations under the USA FCPA and UK Anti-Bribery Law, they are also subject to increasing strict Anti-Bribery laws in China. There is never a better time for a review of your China anti-bribery compliance practices than now.

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