Some China-related cases highlighted by the firm include:

• Johnson Controls, Inc., a Wisconsin-based temperature control systems manufacturer, settled an SEC proceeding on July 11, 2016, arising from alleged violations of the FCPA's books-and-records and internal control provisions associated with the company's Chinese subsidiary allegedly bribing local state shipyard officials in China from 2007 and 2013. Johnson Controls agreed to pay $13.18 million in disgorgement of alleged illicit profits plus prejudgment interest, and a $1.18 million civil penalty.
• AstraZeneca PLC, a UK-based biopharmaceutical company, agreed with the SEC on August 30, 2016 to resolve FCPA charges of alleged misconduct in China and Russia between 2005 and 2010. The Chinese subsidiary reportedly provided cash, gifts, speaker fees, and other valuable items to local public healthcare providers as incentives to purchase or prescribe its products and reduce penalties proposed against the entity. The company's Russian employees were similarly accused of making improper payments. AstraZeneca agreed to the entry of an SEC order finding FCPA books-and-records and internal control provisional violations and paid $5.15 million in disgorgement plus prejudgment interest, as well as a $375,000 civil penalty. The DOJ closed its investigation without filing charges.
• Jun Ping Zhang, a U.S. citizen and former chairman and CEO of the Chinese subsidiary of Florida-based information technology company Harris Corporation, agreed to an SEC-filed FCPA proceeding on September 13, 2016. Zhang was charged with leading a scheme where his staff allegedly used false invoices to generate reimbursements funded between $200,000 and $1 million in illegal gifts to officials at public hospitals and health departments in China. He agreed to pay a $46,000 civil penalty.
• NuSkin Enterprises, Inc., a Utah-based personal care products maker, settled an SEC action on September 20, 2016 to resolve claims that its Chinese subsidiary made a Rmb1 million ($154,000) donation to a charity belonging to a local state official in exchange for intervention in an enforcement action against the company. NuSkin agreed to pay $465,000 in disgorgement and prejudgment interest, as well as a $300,000 civil penalty.
• Ng Lap Seng and Jeff C. Yin, a Chinese real estate businessman and his assistant, were charged in an indictment on November 22, 2016 that added FCPA charges to an ongoing criminal case relating to corruption at the United Nations. The two individuals, along with two others, were indicted in 2015 on federal charges together with the former President of the U.N. General Assembly John Ash and former U.N. Deputy Ambassador for the Dominican Republic Frances Lorenzo, relating to a scheme where $1.3 million in bribes were allegedly paid to the U.N. officials (in the form of cash, family vacation, a private home basketball court and a salary for a spouse) between 2011 and 2015 to push various business interests, particularly plans to build a U.N.-sponsored conference center in Macau. The DOJ added these charges based on the U.N. officials qualifying as “foreign officials” under the FCPA. Trial for Seng and Yin is set for May 15, 2017.

Other instances included a Chinese subsidiary of NCH Corp., an industrial supply and maintenance company, and third parties of HMT LLC, a liquid storage tank company, being charged with bribing local state officials. Both Texas-based firms could have faced a heavy fine or criminal indictment, but instead agreed with the DOJ to disgorge their illegal profits in exchange for a declination of prosecution.

And, in the above case of Zhang, the SEC said it did not take action against Harris Corp. because the parent company discovered the misconduct five months after acquiring Zhang's Chinese business—as a result of significant post-integration compliance efforts—and self-reported to the SEC and DOJ. Harris has since terminated all employees of the subsidiary and closed all China operations.

These outcomes were a result of the DOJ's pilot disclosure program launched in April, aimed at incentivizing companies to self-report illegal payments under the FCPA.

“The U.S. government has been increasingly specifically highlighting the benefits of cooperation in various prosecutorial decisions and in fines and penalties in particular,” Kelly Austin, partner-in-charge of Gibson Dunn's Hong Kong office, told China Law & Practice. “Although voluntary disclosure can have a significant impact in the right case and leniency and cooperation credit are important, there is a whole host of other factors that companies should consider.” (Our sibling publication The Texas Lawyer explored the risks that need to be weighed in self-reporting, such as relinquishing control over to the government and increasing exposure to civil litigation.)

And, as part of the agreement with the authorities, some companies—such as in the case of UK pharmaceutical company GlaxoSmithKline PLC, which concluded the U.S. chapter of its China bribery scandal by settling with the SEC for $20 million in September—may be required to update the SEC or DOJ on ongoing internal compliance implementation efforts for a number of years.

“Companies must submit written reports to the government that set forth the remediation steps that have been undertaken, the ways in which their internal controls and policies have been updated to comply with the FCPA, and the proposed scope of reviews to be conducted, such as risk analysis and audit and compliance checks,” said Austin.

These are usually very comprehensive presentations and there are often follow-on meetings between the corporate counsel and government to discuss whether further monitoring efforts are needed and the policies are reasonably designed to detect and prevent FCPA breaches, she added.

GSK puts bribery charges to rest in the U.S.

One of the year's U.S. FCPA highlights was the end of the long-running anti-corruption investigation into GSK concerning its sales activities in China, where its local subsidiary and joint venture allegedly provided cash, gifts, travel, entertainment, shopping excursions and other valuable items to boost purchases by hospitals and prescriptions by public healthcare providers. These activities resulted in millions of dollars in increased sales of GSK products to China's state health institutions.

Back in 2014, China's official Xinhua News Agency reported that GSK China's management had expanded sales departments, built bribery costs into drug prices and ordered subordinates to offer bribes to hospitals, doctors and healthcare institutions to drive sales, and even tried to bribe local State Administration for Industry and Commerce (SAIC) officials to influence and end ongoing investigations. The Chinese government ultimately fined the British drug maker a record Rmb3 billion ($489 million), and sentenced several executives—including the China head of operations and general counsel—to prison.

In the 2016 SEC order, GSK agreed to pay a $20 million civil penalty for violating the FCPA's internal control and accounting provisions, as well as self-report to the SEC on the status of its anti-corruption compliance program over the next two years.