- Clarification of parties subject to commercial bribery charges
- Clarification of key factors when determining commercial bribery
China’s policy of becoming more open, celebrating its 30th anniversary, coupled with its phenomenal growth rates and record increases in trade and foreign direct investment, attracted the world’s attention. However, in any country, such rapid economic expansion, with parallel commercial opportunities and wealth creation, can also create new opportunities for bribery and corruption. Over the past 20 years, China has introduced a series of laws and regulations to guide business operators and government officials in their day-to-day activities. In addition, the Communist Party has issued numerous internal rules governing the activities of government officials regarding gift giving, entertainment and foreign visits.
Nevertheless, the number of corruption cases in the courts continues to rise, with 120,000 cases brought before the Beijing courts between 2003 and 2008. Moreover, in recent years, many cases of corruption before China courts have involved high-profile government officials including the case against the former party chief in Shanghai, Chen Liangyu, that resulted in a lengthy prison sentence.
The PRC Criminal Law, the primary law on bribery and corruption in China, explains two types of bribery: official and commercial. Official bribery comprises various offenses involving state functionaries and government bodies or entities involving kickbacks, rebates, property and other gifts of value offered to government officials and bodies for the purpose of obtaining benefits. In contrast, commercial bribery relates to offenses by those in the private business sector.
On November 20, 2008 the Supreme People’s Court (“SPC”) and the Supreme People’s Procuratorate issued Opinions on Several Issues Concerning the Application of Laws to Commercial Bribery Cases (“Opinions”), which are now effective. The Opinions set forth the various commercial bribery charges that may be brought against individuals and legal entities: accepting or offering bribes from or to nonstate employees; accepting or offering bribes; offering bribes by or to an organization; and introducing bribes..
The Opinions also specify the types of legal persons that can be charged with commercial bribery by elaborating on the PRC Criminal Law:
(i) “Other organizations” including institutions, social organizations, village committees, neighborhood committees, village groups, and also temporary organizations such as sports organizing committees;
(ii)“Staff at companies, enterprises and other institutions” including nonstate-employed staff of state-owned enterprises (SOEs) and other state-owned units;
(iii) “Staff at medical institutions” including state- and nonstate-employed staff and all medical staff;
(iv) “Staff at educational institutions” including state- and nonstate-employed staff and all teaching staff; and
(v) “evaluation committees, negotiating teams” in competitive purchase negotiations and “inquiry teams” engaged in processing requests for quotations (including members representing SOEs and units).
The Opinions also describe some of the most common forms of commercial bribery, such as financial inducement, gifts and other valuable items, such as bank or membership cards.
The Opinions also detail a range of diverse factors that should be considered when authorities must determine whether the offense of commercial bribery has been committed. These include the circumstances under which the transaction took place; the value of the property involved; the purpose, timing and methodology of the transaction; and, most importantly, whether the transaction resulted in the recipient using his or her station to confer an illegitimate benefit on the party that offered or gave the property.
The Opinions are a welcome addition to China’s laws and regulations and provide the public, investigating authorities and courts with an enhanced understanding of the law and the importance of ensuring a corruption-free and level playing field for all when conducting business.