Why Compliance with the US Foreign Corrupt Practices Act Matters in China

January 31, 2008 | BY

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How is it that US law can apply to certain Chinese companies and the conduct of Chinese business executives? The answer is the Foreign Corrupt Practices Act (FCPA), a broad-reaching US law enacted to prohibit bribery as a means of obtaining and retaining business. A common misperception in the business community is that the FCPA applies only to US companies and US citizens. However, under certain circumstances, the FCPA can also apply to the conduct of Chinese companies and Chinese business executives, making FCPA compliance crucial.

By Mike Koehler*

By all accounts, the Chinese government is increasing enforcement of its domestic corruption and bribery laws and Chinese business executives are no doubt well aware of the severe penalties and fines for engaging in bribery in China.1 However, it may not be well understood that, under certain circumstances, Chinese companies and Chinese business executives engaging in bribery in China may also be subject to prosecution by the US government.2

This article does not aim to show how the actions of Chinese nationals employed by US companies in China can expose their US employer to FCPA liability

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