In the news: RMB enters IMF basket, GSK pays the SEC a $20M fine, the Belt and Road gets a boost and Didi snaps back at local driving rules

GSK to pay $20 million in SEC bribery probe

GlaxoSmithKline PLC agreed to pay $20 million to settle charges that the British drug maker's Chinese subsidiaries engaged in bribery schemes to increase sales, the U.S. Securities and Exchange Commission (SEC) said. The SEC alleged that between 2010 and 2013, GSK's subsidiary and a local Chinese joint venture violated the Foreign Corrupt Practices Act (FCPA) by providing inappropriate gifts to officials, including healthcare professionals, and falsely recording these payments as legitimate expenses. The bribes took the forms of gifts, improper travel, entertainment with little or no educational purpose, shopping trips and cash, according to the order. GSK agreed without confirming or denying the charges. The SEC charge follows a 2014 court ruling in China where the company was slapped with a record $492 million fine for the same matter. GSK China's investigation was arguably the nation's most high-profile corruption probe ever conducted. It set a number of precedents, such as in the level of cross-country coordination by various regulators including the public security organ, and the government's added focus on bribe givers as well as takers, and corporations well as individuals. The case drastically changed the compliance landscape for MNCs in China, as it showed that the entwining and broad jurisdictions of the PRC Criminal Law, the U.S. FCPA and UK Bribery Act can have truly global consequences. The UK Serious Fraud Office's criminal investigation into GSK is still ongoing.

PBOC pushes renminbi clearing houses along Belt and Road

The People's Bank of China (PBOC) will continue to make more bilateral currency swap deals and enlarge the scope and scale of renminbi settlements with countries along the One Belt, One Road initiative, to cut exchange rate risk and transaction cost for trade and investment, a senior PBOC official said on Wednesday. It has so far signed 21 bilateral currency swap agreements with central banks in Belt and Road nations, with a total scale of Rmb1.4 trillion. Six countries along the routes have been authorized by the PBOC as renminbi qualified foreign institutional investors (RQFIIs) with a total quota of Rmb330 billion. The PBOC accelerated efforts to boost the currency's global usage in 2010, setting up the first clearing banks in Hong Kong and Macau. While entry into the IMF's reserves basket this month will spur inflows into Chinese assets, the renminbi has a lot of catching up to do if it wants to provide any sort of competition to the U.S. dollar. The Chinese currency currently accounts for less than 2% of global payments, compared with more than 42% for the greenback.

New draft regulation hampers Didi's growth

Draft rules looked at by several major cities including Beijing, Shanghai and Shenzhen to reduce the pool of drivers available to ride sharing services have prompted a strongly worded protest from Didi Chuxing. The rules restrict driver's permits to people who are local residents in the cities, and require vehicles to meet size and wheelbase limits and install GPS and emergency alert devices. In response, Didi said “millions of ride-hailing drivers are about to lose their jobs and paychecks,” stating that for example only less than 2.4% of its 410,000 drivers in Shanghai are residents. While the local governments do need to take steps to control traffic and pollution, the draft regulations would reduce the number of drivers—and passengers—and ramp up costs. The national legislation issued this August to legalize ride-hailing services was more or less welcomed by the industry as it took a less tough stance than its earlier draft, but it appears it's the local rules supplementing the central guidelines that may cause the most pain.

Renminbi joins IMF reserve currency basket

The renminbi officially achieved global reserve currency status last Saturday, a milestone seen breathing life into China's bond markets by prompting estimated inflows of as much as $1 trillion over the next five years. Its entry into the International Monetary Fund (IMF)'s Special Drawing Rights (SDR), alongside the U.S. dollar, euro, British pound and Japanese yen, comes as China aims to boost the currency's usage worldwide and works to provide an alternative to the greenback. Now that the IMF inclusion is over and done with, China has allowed the renminbi to decline past the key level of 6.7 to the dollar as the dollar advances. This, while negative for the currency in the short-term, does show that policy makers are not holding on to specific marks and will probably focus more on controlling excessive volatility. That isn't to say that the market has become totally predictable: China can and will enforce its authority, especially when things don't go its way, SDR entry or not.

GSK to pay $20 million in SEC bribery probe

GlaxoSmithKline PLC agreed to pay $20 million to settle charges that the British drug maker's Chinese subsidiaries engaged in bribery schemes to increase sales, the U.S. Securities and Exchange Commission (SEC) said. The SEC alleged that between 2010 and 2013, GSK's subsidiary and a local Chinese joint venture violated the Foreign Corrupt Practices Act (FCPA) by providing inappropriate gifts to officials, including healthcare professionals, and falsely recording these payments as legitimate expenses. The bribes took the forms of gifts, improper travel, entertainment with little or no educational purpose, shopping trips and cash, according to the order. GSK agreed without confirming or denying the charges. The SEC charge follows a 2014 court ruling in China where the company was slapped with a record $492 million fine for the same matter. GSK China's investigation was arguably the nation's most high-profile corruption probe ever conducted. It set a number of precedents, such as in the level of cross-country coordination by various regulators including the public security organ, and the government's added focus on bribe givers as well as takers, and corporations well as individuals. The case drastically changed the compliance landscape for MNCs in China, as it showed that the entwining and broad jurisdictions of the PRC Criminal Law, the U.S. FCPA and UK Bribery Act can have truly global consequences. The UK Serious Fraud Office's criminal investigation into GSK is still ongoing.

PBOC pushes renminbi clearing houses along Belt and Road

The People's Bank of China (PBOC) will continue to make more bilateral currency swap deals and enlarge the scope and scale of renminbi settlements with countries along the One Belt, One Road initiative, to cut exchange rate risk and transaction cost for trade and investment, a senior PBOC official said on Wednesday. It has so far signed 21 bilateral currency swap agreements with central banks in Belt and Road nations, with a total scale of Rmb1.4 trillion. Six countries along the routes have been authorized by the PBOC as renminbi qualified foreign institutional investors (RQFIIs) with a total quota of Rmb330 billion. The PBOC accelerated efforts to boost the currency's global usage in 2010, setting up the first clearing banks in Hong Kong and Macau. While entry into the IMF's reserves basket this month will spur inflows into Chinese assets, the renminbi has a lot of catching up to do if it wants to provide any sort of competition to the U.S. dollar. The Chinese currency currently accounts for less than 2% of global payments, compared with more than 42% for the greenback.

New draft regulation hampers Didi's growth

Draft rules looked at by several major cities including Beijing, Shanghai and Shenzhen to reduce the pool of drivers available to ride sharing services have prompted a strongly worded protest from Didi Chuxing. The rules restrict driver's permits to people who are local residents in the cities, and require vehicles to meet size and wheelbase limits and install GPS and emergency alert devices. In response, Didi said “millions of ride-hailing drivers are about to lose their jobs and paychecks,” stating that for example only less than 2.4% of its 410,000 drivers in Shanghai are residents. While the local governments do need to take steps to control traffic and pollution, the draft regulations would reduce the number of drivers—and passengers—and ramp up costs. The national legislation issued this August to legalize ride-hailing services was more or less welcomed by the industry as it took a less tough stance than its earlier draft, but it appears it's the local rules supplementing the central guidelines that may cause the most pain.

In the news: RMB enters IMF basket, GSK pays the SEC a $20M fine, the Belt and Road gets a boost and Didi snaps back at local driving rules

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