China’s Overseas Bribery Law One Year On

As reported previously, in February 2011, China enacted an amendment to its Criminal Law that criminalized paying bribes to non-Chinese government officials and officials of international organizations (“the Amendment”).

The Amendment, which took effect in May 2011, reads:

Whoever, 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 accordance with the provisions of the preceding paragraph [i.e., the pre-existing Article 164].

In the intervening year, no investigations or prosecutions under the Amendment have been publicly announced.

But even without publicly announced investigations or prosecutions, the Chinese government does appear to be giving attention to the recent Amendment.

First, we understand that at certain international meetings, Chinese officials have privately indicated that they have initiated investigations into violations of the Amendment.

Second, as part of a document issued to prosecutors, the Supreme People’s Procuratorate and Ministry of Public Security issued guidance in November 2011 indicating that the prosecution thresholds under the Amendment are RMB 10,000 (about US$1,580) for prosecutions of individuals, and RMB 200,000 (about US$31,640) for “units” (i.e., companies). The guidance states that bribes above these amounts should be prosecuted.

Third, guidance issued by the Ministry of Public Security in March 2012 states that investigations under the Amendment should be handled by the Economic Crime Investigation Bureau.

We also understand that the Supreme People’s Procuratorate has been working on guidance on bribery cases more broadly.  Several commentators have called for such guidance to clarify key terms such as “foreign public official” and “illegitimate commercial benefit.” (It appears likely that the term “property” will be interpreted broadly — and consistently with China’s other anti-bribery laws — pursuant to 2008 guidance from the Supreme People’s Court and Supreme People’s Procuratorate.)

Taken together, these developments suggest at least some focus by Chinese officials on giving effect to the Amendment. Time will tell whether we see actual enforcement of the Amendment. In the meantime, all local Chinese employees should at least be on notice that China, like a growing number of countries, prohibits its citizens and companies from paying bribes overseas and may well take steps to ensure that the new law is more than the proverbial “paper tiger.”

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Eric Carlson is a Contributing Editor of the FCPA Blog. He’s a Beijing-based attorney at Covington & Burling LLP. He specializes in anti-corruption compliance and investigations, with a particular focus on China and other regions of Asia. He speaks Mandarin and Cantonese. He has written about last year’s amendment to China’s Criminal Law here, and he can be contacted here.