Search for:

Anti-Corruption Risk Map – China

By Mini vandePol, Simon Hui and Vivian Wu (Baker McKenzie China)

Primary foreign anti-bribery legislation and enforcement agencies

PRC Criminal Law (as amended and supplemented)[1]

Investigating agencies: Supreme People’s Procuratorate, Regional Peoples’ Procuratorates, Public Security Bureaus, Discipline Inspection Committees (each over different areas)

Prosecuting agency: Regional People’s Procuratorates

Anti-Unfair Competition Law (AUCL)[2]

Civil and administrative offenses apply to bribes paid to business operators or their staff to purchase or sell products with the business.[3]

Investigating and penalizing agencies: State Administration for Industry and Commerce (SAIC) and its local counterparts (collectively, AIC)

Bribery Giving Record

According to the Regulation on Checking the Bribery Giving Record prepared by the Supreme People’s Procuratorate, 6 February 2013, all convicted bribe givers, either individuals or legal entities, are recorded in a national bribery database that is open to the public for inquiry.

Bribery in Pharmaceuticals

According to the Regulation on Establishing Commercial Bribery Record in the Pharmaceutical Trade Industry prepared by the National Health and Family Planning Commission, 25 December 2013, individuals or legal entities who bribe healthcare institution staff (including healthcare professionals, person-in-charge of the institution or the people in charge of the procurement) in order to sell their healthcare products will be recorded in the commercial bribery record and be publicly announced.

According to the Interim Measures for the Administration of the List of Dishonest Enterprises Committing Serious Illegal Activities promulgated by the SAIC, which came into effect on 1 April 2016, enterprises who have repeatedly committed certain illegal activities, including commercial bribery offenses, can be added to a blacklist published in the Enterprise Credit Information Publicity System provided by the SAIC.

Offenses

PRC Criminal Law

Criminal offenses

The following are some of the “bribery” and “commercial bribery” offenses:

  • Bribery of a state functionary or a person related to the state functionary by an individual (Art 389, 390A) – Whoever provides money or property to an incumbent or former state functionary or a close relative of or a person closely related to the state functionary for illegitimate benefits shall be guilty of an offense.
  • Bribery of a state functionary or a person related to the state functionary by an entity (Art 390A, 393) – An entity offering bribes to an incumbent or former state functionary or the close relative of or a person closely related to the state functionary for illegitimate benefits shall be guilty of an offense.
  • Bribery of a state entity by an individual/entity (Art 391) – A person who gives money or property to a state organ, state-owned company, enterprise, institution or people’s organization for illegitimate benefits shall be guilty of an offense.
  • Introducing a bribe to a state functionary/entity (Art 392) – A person who introduces a bribe to a state functionary shall be guilty of an offense.
  • Receiving a bribe (non-state functionaries/entities) (Art 163) – Where an employee of a company or enterprise takes advantage of their position, demands money or property of another in return for benefits for that person, they shall be guilty of an offense.
  • Giving a bribe (non-state functionaries/entities) (Art 164) – A person who gives money or property to an employee of a company or enterprise seeking illegitimate benefits (this also applies to bribing functionaries of foreign countries or international public organizations for an improper commercial benefit) shall be guilty of an offense.

Defenses – The circumstances are minor, and the harm done is not serious (Art 13).

Corporate liability – Criminal and administrative liability (Art 30)

Corporations in some industries can be blacklisted by the Regional People’s Procuratorate to prohibit entities from being considered in public tenders (see Circular Concerning Rules on the Establishment of Commercial Bribery Blacklists for Purchase and Distribution in the Health Care Industry (Circular No. [2013] 50)).

Corporations on the blacklist published in the Enterprise Credit Information Publicity System may be subject to joint sanctions imposed by multiple government authorities, in addition to the administrative penalties provided in the administrative law. Such sanctions may include, among other things, restrictions or prohibitions in relation to business operations, investment and financing, acquisition of lands, import and export, market entry and exit, registration of new companies, project bidding, government procurement, and safety and production licensing (see Memorandum of Collaborative Supervision and Joint Sanction on Dishonest Enterprises).

Director’s liability for an entity’s offense exists in some circumstances (see Art 149 PRC Company Law; Art 31 Criminal Law). Directors can be criminally liable for the entity’s offense if the directors are actually in charge of the entity or directly responsible for offenses, and also can be required to compensate the entity, including where enforcement proceedings are brought by shareholders (Art 152 PRC Company Law; Art 31 Criminal Law).

Extraterritorial application: Applicable to the following:

PRC citizens outside the PRC (Art 7)

Non-PRC citizens and companies for bribing a person outside the PRC, where the interests of the PRC State are harmed, provided bribery is an offense in the foreign state (Art 8)

PRC citizens and China-based companies for bribing functionaries of foreign countries or international public organizations for an improper commercial benefit (Art 164)

AUCL

Commercial bribery (Art 8)

Managers who offer business counterparts money, property or “other methods” to exclude competition when purchasing or selling commodities shall be guilty of an offense.

Managers who give a secret commission to others without recording them in the normal accounting records shall be guilty of an offense.

Defenses:

  • The payment is a discount or commission to an intermediary that is recorded in the normal financial records and provided in a transparent manner (Art 8).
  • The payment is an advertising gift of small value made in accordance with commercial practice (Art 8 Interim Regulations).

Corporate Liability – Companies can be held liable for acts of their employees, agents or legal representatives (Art 3 Interim Regulations).

Director’s civil liability – Directors can be required to compensate the entity, including where enforcement proceedings are brought by shareholders (Art 152 PRC Company Law).

Extraterritorial application – This is not likely.

Penalties – Criminal and Administrative liability

PRC Criminal Law

Where the penalty depends on the amount of the bribe, multiple bribes are aggregated to determine that amount (Art 383 Criminal Law, Art 5 Interpretation Guidelines).

For bribery of a state functionary by an entity (Art 393) – Fine, with those in charge and directly responsible personnel subject to five years’ imprisonment or criminal detention and fine

For bribery of a person related to the state functionary by an entity (Art 390A) – Fine, with those in charge and directly responsible personnel subject to three years’ imprisonment or criminal detention and fine

For bribery of a state functionary by an individual (Art 389) – (see also Art 4 Interpretation Guidelines, Art 390 Criminal Law)

  • Ten years to life imprisonment for:
  • acceptance of over RMB1 million in bribes;
  • acceptance of over RMB500,000 where bribes are offered to more than three people, are from illegal income, or are offered to state functionaries responsible for specific prescribed functions; or
  • causing a direct economic loss of RMB5 million
  • Five to 10 years’ imprisonment for serious circumstances or for causing heavy losses to state interests
  • Less than five years imprisonment or criminal detention in other cases

For bribery of a person related to the state functionary by an individual (Art 390A Criminal Law)

  • Seven to 10 years’ imprisonment for extremely serious circumstances or for causing heavy losses to the state interests
  • Three to seven years’ imprisonment for serious circumstances or for causing heavy losses to state interests
  • Less than three years’ imprisonment or criminal detention in other cases

For bribery of a state entity by an individual/ entity (Art 391) – Three years’ imprisonment or criminal detention and fines to individuals, i.e., person-in-charge and direct responsible personnel of entities, and fines to entities

For introducing a bribe to a state functionary/ entity (Art 392) – Three years’ imprisonment or criminal detention

For receiving a bribe (non-state functionaries/ entities) (Art 163) – Less than five years’ imprisonment if a relatively large amount is involved, and over five years’ imprisonment if a huge amount is involved

For giving a bribe (non-state functionaries/ entities) (Art 164) – Less than three years’ imprisonment if a relatively large amount is involved, and less than 10 years’ imprisonment plus a fine if a huge amount is involved

A voluntary confession may reduce or exempt the penalty (Art 67, 390 Criminal Law, Art 7 Interpretation Guidelines). However, exemption from criminal liability will not be granted (Art 10 Interpretation Guidelines) in the event that:

  1. bribes are offered to more than three people;
  2. previous penalties for bribery have already been imposed;
  3. bribes are offered to commit a criminal act; or
  4. the bribes result in serious harmful consequences.

Return of improper property interest (Art 11 Interpretation Guidelines) – Proceeds of bribery may be recovered, ordered to be refunded, or returned to victims.

AUCL

For commercial bribery that amounts to an offense under the Criminal Law (Art 8) – Penalties as per the Criminal Law (Art 22)

For commercial bribery that is not an offense under the Criminal Law (Art 8) – Administrative penalties for individuals/entities (Art 22):

a fine ranging from RMB10,000 to RMB 200,000; and/or

confiscation of illegal income

This list is to be used as a guide only. It is intended to provide high-level information regarding the primary laws in the specified countries in relation to anti-bribery and anti-corruption laws. Please refer to the relevant legislation for detailed information and to ensure that the information contained in this guide is up-to-date, and refer to the relevant Baker McKenzie contact for the jurisdiction for specific advice.