Punishment for active bribery
The first document entitled Opinions on Further Promoting the Investigation of Bribery and Acceptance of Bribes (关于进一步推进受贿行贿一起查的意见, at the time of publication of this article no public access was provided to document) is an important milestone in the campaign against corruption in China and taken together with the last year’s amendments to the criminal law that provided for more severe penalties for the non-public officials illustrates the change in the approach of the country to law enforcement in the cases of bribery and the shift of focus from passive to active bribery.
The document is designed to be applied to legal and natural persons that are either involved in large-scale corruption schemes or in transferring/offering large sums of bribes or in multiple cases of bribery, and cover a broad array of industries, including environmental protection, finance, social insurance, medical care, and education, implementation of major and priority projects etc.
The main innovation provided for by the document is the introduction of blacklists of natural and legal persons, including international corporations implicated in bribery of either state functionaries or members of the private sector in China. Furthermore, the potential sanctions for such persons can be rather serious, and those on the blacklist could be stripped of their access to China’s markets and denied the right of doing business in China.
Some experts assert that due to this document the investigation of alleged corrupt practices of companies in China conducted in other countries (for example, in the U.S. that often holds companies liable for bribery of Chinese officials under the FCPA; in particular roughly 50 out of 182 cases initiated between 2008 and 2021 against legal persons concerned bribery of officials in China) will potentially lead to “carbon copy prosecutions” in China and imposition of relevant sanctions and vice versa: other countries’ authorities can decide to initiate criminal proceedings based on the action of the Chinese law enforcement authorities under the new document.
Therefore, the publication of the Opinions reaffirms the trend that has developed over the recent years with respect to the cases of transnational corruption crime: foreign countries have been using ever more actively the approach in accordance to which a company that has settled a bribery case with law enforcement authorities of a country can at the same time be subject to an investigation and/or be convicted of basically the same offences in another country.
Third-party assessment of compliance programmes
The other document entitled Guiding Opinions on the Mechanism for Third-Party Supervision and Evaluation of Enterprises Implicated in Criminal Cases (to be applied in court proceedings) (关于建立涉案企业合规第三方监督评估机制的指导意见（试行) will be used at the next stage of the pilot project aimed at reforming corporate governance in certain Chinese regions* in economic criminal cases and duty-related criminal cases (i.e., offenses that take advantage of a person’s function and duty, such as bribe-taking involving state functionaries) with regard to the production and operation activities of companies, enterprises and other market players.
To this end, the Supreme People’s Procuratorate, the Assets Supervision and Administration Commission of the State Council, the Ministry of Finance, the All-China Federation of Industry and Commerce together with the Ministry of Justice, and the State Administration for Market Regulation, the Ministry of Ecology and Environment, the State Taxation Administration, the State Administration for Market Regulations and the Chinese Council for the Promotion of International Trade establish a central Committee on the Management of the Mechanism for Third-Party Supervision and Evaluation, while People’s Procuratorates, state-owned Assets Supervision and Administration Commissions, Departments of Finance and Federations of Industry and Commerce Management institutions at the pilot region level will create regional committees on the management of the mechanism for third-party supervision and evaluation.
The central Committee is empowered to develop general rules and policies and oversee the regional committees, whereas the regional committees, on their side, are responsible for creating and maintaining the database of compliance experts, including lawyers from different fields of activity and branches of law, as well as appointment, training, evaluation and oversight of the individuals that conduct third-party evaluation of compliance programmes, including the evaluation of organisations and their members in the pilot regions.
The initiation of third-party evaluation of compliance programmes is possible at the request of either the People’s Procuratorate or the organisations and natural persons involved in proceedings and their attorneys (defence lawyers).
If the decision to conduct the evaluation procedure is taken, the regional committee picks randomly experts from the database and sets up an organisation for conducting third-party assessment based on the specific circumstances of the case and the type of organisation involved, and publishes the notification about the establishment of this organisation.
The organisation for conducting third-party evaluation requests the company subject to the verification to provide its compliance plan which, according to the document, should be primarily focused on the structure of internal management, rules and provisions, staff management and other issues closely related to the alleged crime committed by the company. Throughout the verification period the organisation for conducting third-party evaluation is free to periodically check and assess the implementation of the compliance plan and/or ask the company to regularly inform it about the implementation of the plan in writing.
The findings of the evaluation will be used by the People’s Procuratorate to take the decisions concerning arrests and court proceedings both with respect to the organisations and business operators, managers and other key staff of the entities.
Additionally, in the event that based on the findings of the evaluation procedure the People’s Procuratorate decides that the company has incomplete systems, does not implement them properly, has inadequate management or latent risks of illicit activities that should be timely eliminated, it can combine the criminal case file and the findings of the evaluation of the compliance programme of the organisation and provide the relevant company with recommendations on how to eliminate the violations detected.
The adoption of the Guiding Opinions gives unequivocal legal grounds for enforcing the mechanism for waiving criminal prosecution in corruption cases, particularly in those with the involvement of international corporations, and creates additional incentives for the organisations operating in China to develop and implement adequate compliance programmes.
*The pilot project on the reform of corporate governance was launched in China in 2020 with the initiation of the mechanism for waiving criminal prosecution in corporate proceedings in six procuratorates of the first level. Last April, after the Plan for the Implementation of the Pilot Programme of the Corporate Reform of Compliance with Legal Provisions was released, the second stage of the pilot project was launched with the participation of ten provinces and municipalities under the direct administration of the central government, including Beijing, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Hubei, Hunan and Guangdong, each of which chose one or two procuratorates of the first level to implement the pilot project.