The People's Republic of China has joined the growing number
of nations to criminalize bribery of foreign officials through
recent amendments to its Criminal Law, which took effect May 1,
2011. Though the PRC had already criminalized payment of bribes to
Chinese governmental officials, the amendment represents the first
time that the PRC has prohibited PRC residents and companies from
paying bribes to foreign officials.
The pre-existing provision of the Criminal Law had criminalized
"giving money or property to any employee of a company or
enterprise or other entity" "for the purpose of seeking
illegitimate benefits." The amendment simply adds that
"[w]hoever, for the purpose of seeking illegitimate commercial
benefit, gives property to any foreign public official or official
of an international public organization" shall be punished in
the same manner as one who bribes a PRC governmental official.
There appear to be no defenses or exceptions to the provisions.
The jurisdiction of the Criminal Law—and as a result,
these provisions—is rather broad. The Criminal Law
applies to all PRC citizens—whether they are located
within the PRC or elsewhere—anyone of any nationality
located within the PRC, and all companies, enterprises, and
institutions organized under PRC law. Generally, that would include
domestic companies, Sino-foreign joint ventures, wholly
foreign-owned enterprises, and representative offices.
The penalties provided for violations of these provisions are
severe. Depending on the amounts involved, the sentence may be a
fixed-term of imprisonment of not more than three years or criminal
detention, or when larger amounts are involved, the sentence is a
fixed-term of imprisonment of not less than three but not more than
ten years, in addition to a fine. If an entity is involved, it may
be fined, and the persons directly involved may be imprisoned.
The significance of the terms used in the amendment remains to
be seen. For example, the terms "illegitimate commercial
benefit," and "international public organization"
are not defined within the Criminal Law. And of course, many
countries have laws criminalizing bribery of foreign officials but
do not enforce those provisions uniformly. Thus, until judicial
interpretations or administrative regulations regarding these
provisions are promulgated, parties must rely upon the remainder of
the Criminal Law to provide guidance as to how the provisions are
to be interpreted.
The impact of the law on companies that do business in China, of
course, depends on how the business is structured. Though the law
does not directly affect non-PRC companies, it certainly could
reach a joint venture organized under PRC law between a PRC-company
and a foreign company, or a company with a representative office
within the PRC. As such, companies that do business in
China—particularly through a wholly-owned entity or
representative office should take note of these amendments and
continue to monitor their interpretation and enforcement.
In a criminal trial the charge is the foundation of the accusation & every care must be taken to see that it is not only properly framed but evidence is only tampered with respect to matters put in the charge and not the other matters.
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