Compliance is Global

Compliance is Global

Everybody knows about the FCPA, the Foreign Corrupt Practices Act, which the United States uses to guard against and criminalize actions like bribery committed by USA corporations and individuals abroad. The FCPA focuses primarily on giving “gifts” or bribes to foreign government officials. Fines can be in the multi-millions of dollars.

What you may not know is that China has its own law against similar practices. Buried in China’s Criminal Law is a single Article criminalizing bribery of foreign officials. Of course China has other laws criminalizing bribery of Chinese officials and commercial (B2B) corruption as well.

Global compliance risks are compounding for multinational companies. Now a single act of bribery, somewhere in Asia, elsewhere may result in Criminal fines in the USA, and China. But wait, there’s more! The UK also has a stringent anti bribery law. Where the FCPA has a small exception for “grease payments” small payments to an official to encourage the timely completion of a task the official is obligated to perform in any case, the UK Bribery Law has no such exception. For its part the Chinese law is vague on the issues of “grease payments.”

For global legal and compliance officers, the way forward is education, training and due diligence on local partners and agents worldwide. If you are dong business in China, ask your China lawyer to perform due diligence on your partners. The same applies to your operations in the rest of Asia, and everywhere else.

Strong local contracts are also important. A strong and enforceable contract will not only educate your local partners about the problem of corruption, but will ensure they have some “skin in the game” to incentivize them to stick to your anti-corruption policies.

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