China: A Gift Or A Bribe?

Last Updated: 20 December 2017
Article by Vincent Zhu

"My friend, this is some money to buy some snacks to your kids, please do not refuse it!"

"Bro, don't mention it! Once the deal is done, I will give you a big red packet!"

"Brother, this is just a little gesture, means nothing!"

Finding a solution or finding death?

Send money or send to death?

Wake up! Inside the red envelop there is no room for goodwill!

CASE

Not long ago, a company offered some gifts and awards to its clients during an annual celebration event (the total amount did not exceed ten thousand RMB). Later, the justice department for bribery investigated the company for this matter.

What's the criteria of administrative penalty for commercial bribes?

The reason for that the above enterprise was under investigation might be because it violated the local administrative rules for commercial bribes. The criteria of administrative penalty for commercial bribes is ambiguous.  In practice, there are great differences between the criteria depending on different regions

Since the Anti-Unfair Competition Law and the Interim Regulations of the State Administration for Industry and Commerce on Prohibition of Commercial Bribes are dated, the executive department cannot reach an agreement on the definition of commercial bribes. 

For instance, in Shanghai, law enforcement still uses the monetary value as one of the standards for determining whether a bribery has occurred.

CASE

Recently one pharmaceutical firm was fined CNY three billion and many executives were sentenced for 2-4 years prison. 

The sentence, and its outcomes, hit severely the enterprise as the punishment for commercial bribes was not just a fine but also the criminal responsibility.

The potential legal responsibilities of commercial bribes

Commercial bribes may constitute the following crimes: both accepting and offering bribes by a non-state functionary; accepting bribes by units; offering bribes in exchange of business; offering bribes to a unit, official, business partner, and so on.

In practice, the enterprise paying commercial bribes might be convicted for the crime of offering bribes. The questions here are: how to define the crime of offering bribes? How much money should be involved before it constitutes a crime of offering bribes?

According to Interpretations of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues concerning the Application of Law in Handling Criminal Cases involving Corruption and Bribes, any person who, for the purpose of securing illegitimate benefits, offers bribes amounting to no less than CNY30,000 to a functionary shall be criminally prosecuted as having committed the crime of offering bribes. 

In addition, any person who offers bribes amounting to not less than CNY10,000 but less than CNY30,000 shall be prosecuted for committing the crime of offering bribes if s/he falls into the following circumstances:

  1. offers bribes to three or more people;
  2. offers bribes with illegal gains;
  3. offers bribes to a functionary responsible for the supervision and administration of food, drugs, work safety, and environmental protection to carry out illegal activities.

The new changes in the legislation of commercial bribes

The departments concerned ramp up their efforts to decrease corruption under the new Chinese leadership. China's laws and regulations not only stipulate different crimes aimed at gaining profit, but also increase the punishment for commercial bribes by legislation, especially offering bribes.

The current situation is that more attention is paid to the crime of accepting bribes than the crime of offering bribes. Amendment IX to the Criminal Law of the People's Republic of China aggravate the punishment for the crime of offering bribes:

  1. Includes stipulations about personal property penalty for the crime of offering bribes, which makes criminals suffer from both physical and economic loss.
  2. Restricts the conditions for being punished leniently. Any briber who, before s/he is prosecuted for criminal liability, voluntarily confesses her/his act of offering bribes may be given a lighter or mitigated punishment. This may be particularly the case if the circumstances of a crime are relatively minor and the defendant plays a critical role in detecting a major case. 

Another example would be if the defendant performs any major meritorious service, s/he may be given a mitigated punishment or even be exempted from punishment.

  1. Increases the penalty for crimes that are committed for the purpose of securing illegitimate benefits. Offering bribes to any close relatives of a functionary or other person closely related to a functionary can be detrimental and interpreted as a bribery too.

The summary of these three points could be expressed as follows:

  1. You could not gain benefit even if someone accepts your red packet;
  2. The approach recommended to redeem would be to voluntarily confess;
  3. Bribe would be found out even if giving a red packet to the relatives of someone.

The subsequent effect of commercial bribes

If someone is accused of commercial bribes, the enterprise where the person works will be also involved in the crime.According to the Provisions on Inquiry of Archives of Crime of Offering Bribes issued by Supreme People's Procuratorate, the record of the crime of offering bribes could be easily found out

These provisions strengthen the inquiry system and strive to leave no room for hiding the commercial bribes record.

There are different punishments for different industries, for example, the pharmaceutical companies could not participate in the purchase of public medical institutions. As regards tendering and bidding, the record could be an important criterion for qualification in the process of revision for a tender; qualification as a bidding agency, among others.

In short, even if there is no a specific and unified administrative penalty, this does not mean that there will not be penalty for bribes; criminal penalty is very clear. It is highly recommendable for companies to pay attention to this context and prevent those penalties before taking place.

Previously published 2 November 2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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