New Criminal Law targets bribery, cybersecurity

The 2000 Supreme People's Procuratorate, Regulations on the Standards for Filing Cases of Bribery Crimes define a “relatively large” bribe as that which has a minimum value of Rmb10,000 (around $1,580). Anything above this triggers a criminal offence, but authorities have the discretion to go below in most cases. The judges fix the range of bribery amounts, within which the prosecutors ask for a specific penalty.

Jerry Fang from Global Law Office has spoken to judges who are, however, worried about the discretionary nature and prefer formal guidance. The Supreme People's Court (SPC) may clarify the criteria internally or issue a judicial interpretation, Fang said, as major cities like Shanghai and Beijing have different monetary standards compared with inland provinces.

“Some judges have complained that local courts have been unable to keep up with the pace at which the Criminal Law has been amended,” he said.

Another development is that courts can now forbid parole and or disallow the reduction of sentences for serious corruption offenders who have received a suspended death penalty. “Many officials have avoided prison time through parole or medical reasons, and now that loophole has been closed,” said Fang.

Punishments can only be mitigated if those giving bribes voluntarily disclose their crimes prior to prosecution, and can only be exempted if they provide information crucial to solving a case or perform special services.

A new paragraph has also been added to Article 390 to impose liabilities on individuals who offer bribes to relatives of, or people close to, current or former state officials.

Data privacy

“MNCs will really need to watch out for developments in IP, data privacy and cybersecurity provided in this amendment,” said Fang.

Running parallel to China's broader cybersecurity initiatives, the amended Criminal Law contains new provisions on the illicit sale or provision of personal information.

It increases the scope of coverage from the previous amendment – which targeted violations by employees in specific industries with extensive personal data access – to include a more general provision.

“Financial services, telecom and healthcare generally hold significant amounts of personal information, but this revision shows that data protection issues are by no means limited to those industries,” said Wombolt.

He stressed that cybersecurity is a prominent issue across the board and is not exclusive to China. Wombolt advised MNCs to be sensitive to the issues, rules and regulations for gathering and holding personal data wherever they operate, as well as to put in place systems and controls to prevent disclosures.

The law also increases the liability on internet and network service providers. Failing to fulfil network safety security obligations can lead to criminal fines and up to three years' imprisonment if a violation causes wide dissemination of information or leakage of users' personal data considered to be under “serious circumstances.” The sentence will be extended to three to seven years for violations under “very serious circumstances.”

Response to social issues

The law also tackles aspects that reflect troubles in Chinese society. It includes a focus on protecting the rights of women and minors as well as on fraud in connection with exams – problems that have caused mass unrest.

“Examination fraud and cheating are quite a detailed subject to put into law but it can have a huge social impact if it gets out of control,” said Munro. “This latest amendment shows a genuine attempt by the regulators to address real social and political problems that have arisen as a result of fast-paced development.”

By Katherine Jo

The ninth amendment of the PRC Criminal Law, which came into effect on November 1 2015, adopts a harsher tone on punishment and cracks down on two areas that have dominated the headlines: bribery and data protection.

Passed by the Standing Committee of the National People's Congress on August 29, the revised law increases punishments for bribe-givers and other corruption-related crimes. It also captures an enlarged scope of industries with respect to information security violations.

Breaking bribery

The monetary sums involved in bribes that were previously used to determine penalties have been replaced with general terms such as “relatively large”, “huge” and “especially huge” to account for discrepancies at the local level.

“The more general provisions give broader discretion to the authorities in determining penalties and, indeed, may vary depending on the location,” said Kyle Wombolt of Herbert Smith Freehills. “For example, what is 'relatively large' in Wuhan may not be the same in Shanghai,” he said.

These subjective decisions are already prevalent in criminal law for corruption sentencing purposes and will be applied across the country, said Susan Munro of Steptoe & Johnson in Beijing, adding that the revised method provides flexibility as it is much easier to go by categories that can be interpreted outside of the main law.

The 2000 Supreme People's Procuratorate, Regulations on the Standards for Filing Cases of Bribery Crimes define a “relatively large” bribe as that which has a minimum value of Rmb10,000 (around $1,580). Anything above this triggers a criminal offence, but authorities have the discretion to go below in most cases. The judges fix the range of bribery amounts, within which the prosecutors ask for a specific penalty.

Jerry Fang from Global Law Office has spoken to judges who are, however, worried about the discretionary nature and prefer formal guidance. The Supreme People's Court (SPC) may clarify the criteria internally or issue a judicial interpretation, Fang said, as major cities like Shanghai and Beijing have different monetary standards compared with inland provinces.

“Some judges have complained that local courts have been unable to keep up with the pace at which the Criminal Law has been amended,” he said.

Another development is that courts can now forbid parole and or disallow the reduction of sentences for serious corruption offenders who have received a suspended death penalty. “Many officials have avoided prison time through parole or medical reasons, and now that loophole has been closed,” said Fang.

Punishments can only be mitigated if those giving bribes voluntarily disclose their crimes prior to prosecution, and can only be exempted if they provide information crucial to solving a case or perform special services.

A new paragraph has also been added to Article 390 to impose liabilities on individuals who offer bribes to relatives of, or people close to, current or former state officials.

Data privacy

“MNCs will really need to watch out for developments in IP, data privacy and cybersecurity provided in this amendment,” said Fang.

Running parallel to China's broader cybersecurity initiatives, the amended Criminal Law contains new provisions on the illicit sale or provision of personal information.

It increases the scope of coverage from the previous amendment – which targeted violations by employees in specific industries with extensive personal data access – to include a more general provision.

“Financial services, telecom and healthcare generally hold significant amounts of personal information, but this revision shows that data protection issues are by no means limited to those industries,” said Wombolt.

He stressed that cybersecurity is a prominent issue across the board and is not exclusive to China. Wombolt advised MNCs to be sensitive to the issues, rules and regulations for gathering and holding personal data wherever they operate, as well as to put in place systems and controls to prevent disclosures.

The law also increases the liability on internet and network service providers. Failing to fulfil network safety security obligations can lead to criminal fines and up to three years' imprisonment if a violation causes wide dissemination of information or leakage of users' personal data considered to be under “serious circumstances.” The sentence will be extended to three to seven years for violations under “very serious circumstances.”

Response to social issues

The law also tackles aspects that reflect troubles in Chinese society. It includes a focus on protecting the rights of women and minors as well as on fraud in connection with exams – problems that have caused mass unrest.

“Examination fraud and cheating are quite a detailed subject to put into law but it can have a huge social impact if it gets out of control,” said Munro. “This latest amendment shows a genuine attempt by the regulators to address real social and political problems that have arisen as a result of fast-paced development.”

By Katherine Jo