Getting serious about bribery

The amended Criminal Procedure Law determines one very important circumstance which can influence the investigation and the rights of suspects. Under Article 37, the criminal investigative authority, whether the PSB or the People's Procuratorate in charge of the case, has the right to grant or deny a request for the defence lawyer to interview the criminal suspect. Existing laws already provide some circumstances in which a suspect may be denied access to a lawyer. These circumstances are in cases of terrorism or where public security crimes are investigated. This most fundamental of rights is now further qualified if the investigation is for bribery and the bribery is regarded as particularly serious. Thus, where the amount is suspected to involve more than Rmb500,000, the matter has a huge social impact or it involves national interests, the investigative authorities have the right to deny the suspect's request to meet with a defence lawyer.

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Bribing government officials

The Interpretation on Several Issues Concerning the Specific Application of the Law in Handling Criminal Bribery Cases (关于办理行贿刑事案件具体应用法律若干问题的解释), issued jointly by the Supreme People's Court and the Supreme People's Procuratorate on December 31 2012, reconfirm rules originally adopted in 1999, which provide that unless aggravated circumstances exist, the minimum standard for prosecuting a crime of offering a bribe is Rmb10,000. In addition, these Interpretations introduce, for the first time in Chinese law, a standard for deeming the offering of a bribe as serious (see figure 1).

These Interpretations are a clear attempt to modernise the rules and the effect bribery and corruption have on the public welfare, by linking more serious consequences to the offering of bribes to officials in industries involved in public safety, as well as the judiciary. As is common with Chinese laws and is the case here, the courts also retain a significant amount of discretion to determine other serious circumstances which then may trigger an increase in the severity of the punishment for particular crimes.

The same Interpretations also expand on the definition of securing illegitimate benefits. In 2008, the Supreme People's Court and Supreme People's Procuratorate, in the Opinions on Several Issues Concerning the Application of the Law in Handling Criminal Commercial Bribery Cases (关于办理商业贿赂刑事案件适用法律若干问题的意见), defined the crime of bribery as “seeking any benefit violating a law, administrative regulation or rule, or policy or requiring the opposite party to provide aid or convenience in violation of a law, administrative regulation or rule, policy or industrial norm”. The judicial Interpretations expand on this definition by establishing that the offering of any bribe that aims to violate the principle of fairness and impartiality in order to seek a competitive advantage with respect to commerce, personnel management or other activities shall also constitute an attempt to secure illegitimate benefits. Any of these new circumstances can form the basis for criminal liability.

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Establishing a unified information system

For decades, the government has worked on establishing a relatively comprehensive information system to document all cases of bribery throughout the country. Under the guidance of the Supreme People's Procuratorate, this system was completed and published online in late 2012 and includes all cases from 1997 to the present in which a Chinese court has confirmed the crime of bribery and which relates to construction, finance, medical treatment and public health, education and governmental procurement. Details include the names of the parties involved in the bribery, whether offering or receiving, as long as the act has been subject to a conviction in court. Notably, if one of the parties, either the bribe-giver or the recipient, is not pursued for criminal liability, the name of that party is likely to still be included as a party to the facts underlying the conviction. The database is open to companies as well as individuals and it may be accessed by telephone or by visiting a local People's Procuratorate.

One specific use of this database is in the organisation of tenders. Parties can investigate bidders for a project to confirm their integrity. Bidders themselves face the burden of reporting – they are encouraged to submit a Search Report from the Bribery Crime Database issued by a local People's Procuratorate. In some cities, local rules go one step further. For example, in Shanghai, implementing rules which became effective on May 23 2012 provide that for any tender involving government procurement or government-financed construction projects, the bidding parties must deliver a Search Report to prove that there are no recorded instances of bribery.

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Implications for businesses

The latest legislative developments have one thing in common – the consequences for acts of bribery have become more severe. For businesses, these developments provide further motivation to establish and strengthen internal compliance programmes, which should at the very least include clear, accessible and viable compliance policies. This should cover mandatory, periodic anti-corruption training, risk assessments, a check of the Bribery Crime Database where relevant, due diligence, monitoring and testing of the compliance programme. A reporting mechanism for employees and third parties and penalties for violations of the programme should also be established. It is vital for companies to strengthen their management's awareness about the importance of preventing and maintaining zero tolerance for corrupt acts like bribery.

These new legislative developments also show that companies should be more cautious when dealing with government authorities and avoid any temptation to induce government personnel with any facilitation payments or benefits aimed at obtaining a competitive advantage.

In particular, companies that deal in food, drugs, manufacturing or construction (as examples of industries where the need for safety in production is more prominent), environmental protection and other industries with a direct impact on peoples' lives and the safety of public property must be more careful in their dealings in China, because these developments strongly suggest that the new government in China intends to regulate these areas more strictly – particularly as these areas attract greater attention in social media and other internet-based applications with respect to allegations of corruption.

More generally, companies should understand that a breach of these new rules carries larger risks and more severe penalties:

• Under the new rules, the PSB or prosecutors have considerable leeway to classify a case of bribery as serious, in which case the suspect could be detained without access to legal counsel.
• While acts of offering a bribe involving less than Rmb10,000 are not likely to be prosecuted, a broader range of circumstances may prompt an act of bribery to be deemed serious, which will lead to more severe punishment for the company and those managers responsible for the act or those persons who are in charge of the company. Moreover, expansion of the concept of obtaining an illegitimate benefit will make it more difficult for companies to defend certain conduct.
• Once businesses have been involved in legal actions involving bribery, whether as the offering party or accepting party, or whether they have been pursued for liabilities or not, they may be included in the national database. As the database is open to the public, the potential damage to a named company's reputation and ability to maintain business could be considerable. And in some cases, it may even prevent a company from taking part in lucrative projects such as government tenders.

China's legal regime to tackle corruption has made great strides in recent years. Nonetheless, corruption is still widely believed to be rampant and reported corruption cases involving government officials in 2012 increased by 12% compared with the previous year. The most recent developments focus on strengthening law enforcement and imposing more severe punishments, including publishing a company's record of bribery for the public to access. These trends are indicative of the government's intention to intensify the battle against corruption and serve as a warning to corrupt officials, private individuals and companies, that they could become the government's next target.

Lesli Ligorner and Alice Peng, Simmons & Simmons, Shanghai