Chinese anti-corruption efforts historically targeted recipients of bribes, particularly government officials. In the past year, however, Chinese authorities have initiated…
[T]he crippling threat of being blacklisted should prompt such companies to reevaluate and, if necessary, revise their compliance policies, and to ensure that the proper “tone at the top” is conveyed globally.
— Attorneys Aaron Tidman and Stephanie Willis of Mintz Levin on why pharmaceutical and medical device companies doing business in China must have robust anti-corruption programs in place.
"It has been several months since publicity began about aggressive investigations of potential bribery in the pharmaceutical industry in China. Despite the passage of time and dwindling international media attention, Chinese regulators have not slowed down their efforts to ferret out corruption in the pharmaceutical sector and related industries. Chinese authorities’ determination is reflected not only in new and continuing investigations, but also in the enactment of new legislation."
Although bribery is an integral part of daily life in many countries and can seem a prerequisite to obtaining or advancing any project, the perils awaiting foreigners who adapt to corrupt cultural norms are substantial.
— Peter Seidman of WeComply in Walk a Straight Line — Even if All Roads Are Crooked
- "Have been convicted of bribery as a criminal offence;
- Have been issued a non-prosecution decision by the People’s Procuratorate when the bribery offenses are deemed minor;
- Have been investigated and punished for bribery by the discipline supervision authorities of the China Communist Party; or
- Have received administrative penalties for bribery from relevant administrative authorities.”
Read: China Tightens Controls over Commercial Bribery in the Health Care Industry - Katherine Wang of Ropes & Gray»
When China sneezes, Bitcoin catches a cold.
"Bitcoin’s delicate situation in China is casting a shadow over its future. The boom of the virtual currency this autumn is widely thought to be the result of Chinese users’ demand. As Chinese support has since waned, so has the price. It is expected that bitcoin price would tumble further on news of an all-out ban, since many industry observers credit a rise in bitcoin demand in China as a major contributor to the virtual currency’s price and popularity surge over the past few months. But until the Chinese government takes further actions, a total bitcoin meltdown does not appear to be on the horizon. The ban on new deposits was a blow to the bitcoin system in China and perhaps worldwide, but it does not look like a death knell."
From attorneys Jun Dai, Yao Rao, and Dennis Unkovic of MERITAS, a 22-page guide to key considerations for doing business in China, including:
- role of the government in approving and regulating foreign direct investment
- corporate structures used most frequently by foreign investors
- regulations of joint ventures between foreign investors and local companies
- labor rules on the treatment of local employees and expatriate workers
- conversion of local currency and repatriation of funds overseas
- corporate taxes
- enforcement of intellectual property laws
Read the full update:
From attorneys Jeremy Levin and Daniel Starck of Baker Botts, at look at three significant developments in international anticorruption enforcement:
- The SEC’s investigation into JPMorgan’s “Sons and Daughters” hiring program in China
- U.K. Bribery Act Charges against Sustainable Agro
- The first conviction under the Canadian Corruption of Foreign Public Officials Act
[The Diebold settlement] opens the possibility that the DOJ and SEC will use the books and records provision to pursue commercial bribery by public companies. While such a move would be consistent with other international antibribery laws, it could require publicly listed companies to refocus their compliance efforts and resources.
Attorneys Mark Jensen and Matthew Riemer of Sheppard Mullin on the $48 million in penalties, disgorgement, and interest, and the 18-month compliance monitor imposed on Diebold for alleged bribery in China and Russia.
According to the indictment filed in the Southern District of California, Riedo, along with unidentified co-conspirators and agents, allegedly conspired to, and made, corrupt payments to Chinese government officials and falsely recorded those payments on Maxwell books and records in an effort to retain business, prestige and increased compensation.
The DOJ claims that over a more than six-year period the former executive [at Maxwell Technologies] engaged in a conspiracy to make and conceal payments to Chinese government officials in order to obtain and retain business, prestige, and increased compensation for his company.
Why is the investigation of GlaxoSmithKline’s bribery in China a “game changer” in compliance? Some reasons, from FCPA attorney Tom Fox:
- Although information in corruption investigations is typically not made public, the Chinese government released details of the case as they uncovered them
- China put some executives being investigated under house arrest and took away the passports of others
- This was the first time China prosecuted Western companies for violations of Chinese laws
Watch Tom’s interview with Mary Flood: FCPA Compliance and Ethics Report-Episode 15-GSK in China: a Game Changer in Compliance»
Investigations and information collection are targets of increased scrutiny. Entities and individuals that have previously relied on or participated in the collection of potentially sensitive information should carefully review and evaluate their practices and begin exploring lower risk alternatives. These recent developments signal that certain traditional information-gathering methods that are commonplace in China—and standard practice in most countries—may now involve substantial risk.