Monthly China Anti-Bribery Update Report — October 2016

1. New laws or regulations

State level: No developments.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules: No developments.

2. Upcoming laws or regulations

No developments.

3. Government Action

(1) It was reported on October 14, 2016 that Li Jie (“Li”), the former Deputy Mayor of Haikou City, Hainan Province, was sentenced to 11 years in prison for bribery-taking and fined RMB 1.6 million (USD 236,258) by the No.2 Intermediate People’s Court of Hainan Province.

The court found that from 2004 to 2015, Li accepted from 8 companies and 23 individuals various kinds of properties including cash totaling RMB 9 million (USD 1.32 million) and two bars of gold valuing RMB 19,000 (USD 2,805) (as of the valuation date) in exchange for taking advantage of his positions as the Director of the Road Transport Bureau of Haikou City, the Governor of Meilan District, Haikou City, the Secretary of Meilan District, and the Deputy Mayor of Haikou City in engineering projects, tendering and bidding projects, and project management.

(2) On October 14, 2016, Jin Daoming (“Jin”), the former Deputy Director of the Standing Committee of the National People’s Congress of Shanxi Province, was sentenced to life imprisonment by the Intermediate People’s Court of Zhenjiang City, Jiangsu Province for taking bribes, plus deprivation of political rights for life and confiscation of all his personal properties.

From 2007 to 2014, Jin was alleged to seek illegal benefits for others in such matters as coal mine resources integration, position promotion, and disciplinary investigation by taking advantage of his positions as the Member and Deputy Secretary of the Provincial Party Committee as well as the Secretary of the Provincial Discipline Inspection Commission. In return, Jin illegally accepted from others properties valuing RMB 123 million (USD 18.16 million).

(3) On October 17, 2016, Wei Pengyuan (“Wei”), the former Deputy Director of the Coal Division under National Energy Administration, was sentenced by the Intermediate People’s Court of Baoding City, Hebei Province to death with 2 years’ suspension of execution, plus deprivation of political rights for life for taking bribes and holding large amounts of property from unidentified sources. Wei will not be allowed to apply for any commutation of sentence or parole.

Reportedly, during his term in office from 2000 to 2014, Wei took advantage of his positions to seek benefits for others during the review and approval of coal projects, expert reviews, project contracting, collection of payment for goods, and sales promotion of equipment. In return, Wei illegally accepted properties valued around RMB 212 million (USD 31.3 million). Wei also held large amounts of property largely exceeding his legitimate income with no explainable sources.

(4) On October 18, 2016, Feng Zhiming (“Feng”), a former Member and Deputy Director of the Public Security Bureau in Hohhot City, Inner Mongolia Autonomous Region was sentenced by the Intermediate People’s Court of Hohhot City to 18 years in prison and fined RMB 1.1 million (USD 162,427) for bribe-taking, holding large amount of properties from unidentified sources, illegal possession of a gun and/or ammunition, and embezzlement.

Feng was found guilty of taking advantage of his positions to seek illegal benefits for 13 companies or individuals from 2008 to 2014. In addition, Feng, conspired with his wife, purchased real estate at a price significantly lower than the market price, and sold them to others at a price significantly higher than the market price. The value of the bribes accepted by Feng was over RMB 3.89 million (USD 574,402) in total. Feng was given a lighter sentence due to his confession.

(5) On October 21, 2016, Lin Cunde (“Lin”), the former Deputy Director of Organization Department of Guangdong Provincial Party Committee, was sentenced by the Intermediate People’s Court of Dongguan City, Guangdong Province for taking bribes to life imprisonment, plus deprivation of political rights for life, and confiscation of all his personal properties.

The court found that during his term of office in the Organization Department, Lin took advantage of his position and sought benefits for others in position appointment and promotion, project contracting, and arranging for admission to schools despite insufficient qualifications. The amount of bribes accepted by Lin exceeded RMB 24 million (USD 3.54 million).

4. Other

None.

Monthly China Anti-Bribery Update Report — September 2016

1. New laws or regulations

State level: No developments.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules: No developments.

2. Upcoming laws or regulations

No developments.

3. Government Action

(1) On September 2, 2016, Wei Xinhong (“Wei”), the former Party Secretary of Qinyang Municipal, Henan Province, was sentenced by the Intermediate People’s Court of Jiaozuo Municipal, Henan Province to 13 years in prison and fined RMB 3 million (USD 449,879) for taking bribes. The court determined that Wei received and solicited from others RMB 9.504 million (USD 1.42 million), USD 20,000, and shopping cards valued at RMB 10,000 (USD 1,499) on 74 occasions in return for seeking benefits for them in real estate developments, business operations, land expropriations, position adjustments, etc.

(2) On September 8, 2016, Wu Xilin (“Wu”), the former Director of Department of Outbound Investment and Economic Cooperation of Ministry of Commerce of China, was sentenced by the No. 2 Beijing Intermediate People’s Court to 10-years in prison plus a fine of RMB 500,000 (USD 74,979) for taking bribes. Wu was found guilty of taking advantage of his position to provide assistance for bribe-givers in business operations, awards of contracts, and mitigation of the accident liabilities of enterprises from 2005 to 2009. In exchange, Wu received in the aggregate RMB 3.42 million (USD 512,862) from these enterprises.

(3) On September 9, 2016, Huang Shaoru (“Huang”), the former Director and Deputy Manager of Hainan State Farms Group Co., Ltd., as well as the former General Manager and Chairman of the board of Hainan State Farms South China Investment Co., Ltd., was sentenced by the Intermediate People’s Court of Sanya Municipal, Hainan Province to 13 years in prison for taking bribes and received a fine of RMB 2 million (USD 299,919). The related press release highlighted that Huang was accused of offering help to several individuals in approving project funds, project cooperation, project tendering and bidding, etc. in return for bribes of RMB 14.32 million (USD 2.147 million) and USD 30,000 from the said persons between 2003 and 2013.

(4) It was reported on September 18, 2016 that Zhang Suzhou (“Zhang”), the former President of Anhui Broadcast and TV Station (the “Station”), was sentenced by the Intermediate People’s Court of Huainan Municipal, Anhui Province to 14 years’ imprisonment for bribery and corruption and further subjected to a fine of RMB 2.5 million (USD 374,899). Allegedly, Zhang took advantage of his position to accept bribes in forms of cash, including RMB 11.23 million (USD 1.68 million), USD 47,000, EUR 2,000 (USD 2,237), shopping cards valued at RMB 179,000 (USD 26,842), and gold bars, jade, and watches valued at RMB 1.06 million (USD 158,957) from a number of entities and individuals during his term of office from 2006 to 2014. In addition, Zhang was found to have illegally embezzled public property amounting to RMB 3.39 million (USD 508,364) by means of fabricating bonuses and reimbursements for personal consumption.

Zhao Hongmei (“Zhao”), the Former Vice President of the Station, was sentenced to imprisonment for 12 years and received a fine of RMB 1.6 million (USD 239,935) for the same charges on the same day. Zhao was charged with taking advantage of her position to embezzle public property totaling RMB 1.61 million (USD 241,339) and taking bribes of RMB 5.69 million (USD 852,931).

(5) On September 27, 2016, Ren Jincheng (“Ren”), a former Member of the Standing Committee of the Municipal Committee of Dalian, Liaoning Province and a former Party Secretary of Changxing Island Economic and Technological Development Zone, was sentenced to 13 years in prison by the Intermediate People’s Court of Benxi Municipal, Liaoning Province for taking bribes. Ren also received a fine of RMB 2 million (USD 299,829).

During his term of office from 1998 to 2015, Ren was found to have received bribes on 37 occasions amounting to RMB 22.21 million (USD 3.32 million) in the form of cash, shopping cards, calligraphy, and paintings. In exchange, Ren provided assistance to bribe-givers in bank loan approvals, business operations, the reform of state-owned enterprises, etc.
4. Other

(1) On September 4 and 5, 2016, national leaders attending the G20 Hangzhou Summit unanimously approved and passed the High-level Principles on International Fugitive Repatriation and Asset Recovery (the “High-level Principles”), the 2017-2018 Anti-corruption Action Plan, and establishment of the Research Center on Fugitive Repatriation and Asset Recovery in China.

The High-level Principles, an international anti-corruption document drafted by China following the release of the Beijing Declaration on Fighting Corruption approved by Asia Pacific Economic Cooperation in 2014, provides that the G20 members will create a cooperative mechanism on fugitive repatriation and asset recovery, such as barring the entry of a corrupt individual and establishing a case-by-case investigation assistance system. The High-level Principles also emphasize joint and cooperative investigation and prosecution of corruption and the inter-state collaborative recovery of ill-gotten gains arising from the crime.
5. China-related FCPA Action

(1) It was reported on September 1, 2016 that AstraZeneca, a UK-based drug manufacturer, agreed to pay a fine of USD 5.5 million to settle an investigation instituted by US Department of Justice and US Securities and Exchange Commission (the “SEC”) relating to its violation of Foreign Corrupt Practices Act (the “FCPA”), including disgorgement of USD 4.325 million, prejudgment interest of USD 822,000 and a civil penalty of USD 375,000.

The SEC alleged that for the purpose of promoting and selling AstraZeneca’s drugs, sales and marketing staff of AstraZeneca’ subsidiaries in China and Russia provided gifts, conference support, travel, cash and other benefits to state-employed medical staff since 2005. AstraZeneca’s Chinese subsidiary is also found having bribed local officials for reduction of and exemption from financial sanctions it faced. The abovementioned fees were falsely recorded by AstraZeneca as “bona fide expense.” AstraZeneca was alleged to have turned a blind eye on the above misconducts of its subsidiaries and failed to carry out effective internal audit.

(2) It was reported on September 12, 2016 that Zhang Junping (“Zhang”), former Chairman and CEO of a Chinese subsidiary of Harris Corporation (“Harris”), Hunan CareFx Information Technology Co., Ltd. (“Hunan CareFX”), an information technology company, agreed to pay a penalty of USD 46,000 to settle charges of violating the FCPA.

Zhang, as the supervisor of Hunan CareFX’s sales staff, was alleged to have knowingly permitted or facilitated the sales staff to reimburse fake invoices to generate cash for the purchase of gifts, which would then be offered to government officials of state-owned hospitals and health departments to influence their decisions to buy the products and services of Hunan CareFX. These expenses were improperly recorded as legitimate expense in the book of Hunan CareFX.

Harris will not be charged, due to its prompt self-reporting, active cooperation during the investigation, and its effort to implement its anonymous complaint helpline and integration of Hunan CareFX into its internal accounting controls after acquisition of Hunan CareFX, which led to the discovery of Zhang’s misconduct.

(3) On September 20, 2016, Nu Skin Enterprises Inc. (“Nu Skin”), a Utah-based company, agreed to pay USD 765,688 to settle charges of violating the internal controls and books and records provisions of the FCPA.

In 2013, Nu Skin (China) Daily Use & Health Products Co. Ltd. (“Nu Skin China”), a subsidiary of Nu Skin, was threatened by the local Administration of Industry and Commerce (“AIC”) to be fined RMB 2.8 million (around USD 419,931) for its violation of China laws and regulations on direct selling. Some staff in Nu Skin China then contacted a Party official, to whom the head of the AIC previously reported, to intervene in this matter. In return, Nu Skin China agreed to donate RMB 1 million (USD 149,975) to a charity identified by this official. Nu Skin China received a notice issued by the AIC that it would not be fined or sanctioned for its wrongdoing after the donation. Supporting internal e-mails were found during the investigation, indicating that contacting this official was essential for Nu Skin China to resolve the matter peacefully.

Monthly China Anti-Bribery Update Report — August 2016

1. New laws or regulations

State level: No developments.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules: No developments.

2. Upcoming laws or regulations

No developments.

3. Government Action

(1) On August 2, 2016, Hu Xuefan (“Hu”), the former Director of Tourism Bureau of Anhui Province, was sentenced by the Intermediate People’s Court of Anqing Municipal, Anhui Province to twelve (12) years in prison for taking bribes, with monetary fines of RMB 4 million (USD 598,784) and confiscation of illegal gains of an additional RMB 4.6 million (USD 688,602).

Hu was found to have taken advantage of his position from 1999 to 2014, seeking illegal benefits for over 20 legal entities and individuals through the allocation of special tourism funds, ratings for scenic spots, job adjustments and promotions, etc., and either accepted or solicited bribes in the forms of cash, shopping cards and gold bars, individually or together with his family, amounting to RMB 4.6 million (USD 688,602).

(2) On August 8, 2016, Jian Rujian (“Jian”), the former Deputy Inspector of the Local Tax Bureau of Guangzhou Municipal, Guangdong Province, was sentenced to 13 years imprisonment for accepting and providing bribes by Guangzhou Intermediate People’s Court, with fines of RMB 3 million (USD 449,088).

Jian was accused of offering help to various enterprises during tax inspection periods from 2005 to 2013, and accepting illegal proceeds including multiple real estate properties, calligraphy and paintings, cash and shopping cards aggregating more than RMB 9.54 million (USD 1.42 million).

(3) It was reported on August 15, 2016 that Zhou Yao (“Zhou”), the former Chief of the Management Commitment of Lu’an Economic & Technological Development Area of Anhui Province, was sentenced by the Intermediate People’s Court of Chuzhou Municipal, Anhu to 11.5 years in prison for taking bribes and abusing power. Zhou was also fined RMB 1.6 million (USD 239,513).

Reportedly, during his term of office from 2003 to 2013 Zhou accepted bribes valued at RMB 5.61 million (USD 839,795) in exchange for seeking illegal benefits in land grant price refunds, compensation for demolition, adjustments of construction planning, etc. Zhou was also charged with abusing his power to refund land grant prices and pay additional demolition compensation to two companies, causing economic losses for the state of up to RMB 15.55 million (USD 2.24 million).

(4) On August 19, 2016, Ma Yong (“Ma”), the former Party Secretary of Yiyang Municipal, Hunan Province, was sentenced by the Intermediate People’s Court of Chenzhou Municipal, Hunan to 12 years in prison for accepting bribes totaling RMB 3.68 million (USD 550,881) and for abuse of power.

Ma’s case drew attention in China due to the publication of reports regarding his alleged interference with the judiciary. Ma allegedly accepted bribes of RMB 100,000 (USD 14,969) and a bar of gold valued at RMB 33,000 (USD 4,939) from Hu Shuangfu (“Hu”) from 2012 to 2013, and helped Hu’s two sons get light sentence for their crimes of intentional assault, which eventually caused the death of the victim, abusing the power of his office. In addition, during his term from 2007 to 2013, Ma was found to have received bribes including RMB 910,000 (USD 136,223), USD 123,000, HKD 380,000 (USD 48,992), ERU 10,000 (USD 11,169), 4.7 kilograms of gold, and three watches.

(5) On August 26, 2016, Liu Guosheng (“Liu”), the former Deputy Mayor of Heze Municipal, Shandong Province, was sentenced by the Intermediate People’s Court of Taian Municipal, Shandong to 8-years in prison for taking bribes. Liu was found guilty of illegally seeking benefits for bribe-givers in land grant formalities, the allocation of supporting funds, contracts for greening projects, and other arrangements on fifty occasions. In exchange, Liu accepted cash and shopping cards aggregating to RMB 2.1 million (USD 314,361). Liu was given a lighter sentenced due to his confession and return of illegitimate gains.

4. Other

No developments.

5. China-related FCPA Action

None

Law 1778, Colombia’s Latest Attempt at Bringing its Anti-bribery Laws into Compliance with the OECD Anti-bribery Convention

Since being elected in 2010, Colombian President Juan Manuel Santos has been trying to have Colombia become a member of the Organization for Economic Co-operation and Development (OECD). As part of this endeavor, in January 2011, Colombia formally applied to become a participant of the Working Group on Bribery in International Business Transactions (the “Working Group”) and accede to the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the “Convention”).

Later that year, attempting to have Colombian Law comply with the requirements of the Convention, the Country passed Law 1474, which sought to amend the article of Colombia’s Penal Code that criminalized the bribing of foreign officials (Article 433), by purportedly adding liability for legal persons. Despite the passage of Law 1474, in December 2012, the Working Group in its Phase 1 Report, voiced reservations with regards to Colombia’s legal framework for liability of legal persons and listed other areas of Colombian Law on foreign bribery that could be strengthened. Even so, it found Colombia’s anti-bribery laws generally capable of conforming to the Convention, leading to Colombia officially becoming the 40th Party to the Convention in January 2013.

In its latest 2015 Phase 2 Report, the Working Group noted that while Colombia had made sincere attempts to implement the Convention, it still had not satisfactorily addressed some of the issues and recommendations from the Phase 1 Report. Among the main concerns was Colombia’s failure to properly address issues pertaining to corporate liability. The Working Group stated that the problem was even greater than it had originally thought, noting that under Colombian Law at the time of the Phase 2 Report, financial institutions and the nearly 90 companies listed on the Colombian Stock Exchange were not subject to financial sanctions for foreign bribery. The Phase 2 Report noted, however, that Bill 159, which was before the Colombian Congress at the time, if passed, could rectify most of the concerns raised and bring Colombia’s law more in line with the Convention. Bill 159, which underwent some changes after going through the Colombian Senate, ultimately became Law 1778.

Law 1778 passed on February 2, 2016 and is Colombia’s newest anti-bribery law. It attempts to correct the deficiencies and implement the recommendations of the Working Group. It represents the Country’s latest step in the fight against corruption and bribery and is one which President Santos hopes will result in Colombia being admitted to the Anti-bribery Commission, and eventually, becoming a full member of the OECD.

Law 1778, which shares many similarities with the US Foreign Corrupt Practices Act (FCPA) and other Anti-bribery laws, creates corporate liability for any Colombian company or any of its foreign subsidiaries, as well as for subsidiaries of foreign companies registered to do business in Colombia, when the company, through one or more of its (1) employees, contractors, directors or shareholders (2) gives, offers or promises (3) to a foreign public official (4) directly or indirectly (5) any sum of money, any object of pecuniary value, or any other benefit or gain (6) in exchange for the foreign public official performing, omitting or delaying (7) any act related to the exercise of the foreign public official’s functions and (8) that is related to international business or international transactions.

As recommended by the Working Group in its reports, Law 1778 attempts to address the issues of corporate liability. It also significantly increases the potential financial sanctions for violations. For example, in the 2012 Phase 1 Report, potential sanctions under Colombia’s prior laws was said to range between $157,500.00 and $630,000.00. Under Law 1778, as of 2016, potential sanctions can go all the way up to just over $45 million.

For a Country which, in spite all of the changes in the past few years, ranks 83rd in the 2015 Corruption Perceptions Index, Law 1778 clearly appears to be a step in the right direction and one that Colombian companies and foreign companies registered to do business in Colombia should take notice of.

 

 

 

Monthly China Anti-Bribery Update Report — July 2016

1. New laws or regulations

State level: No developments.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules:

(1) On July 17, 2016, the Central Commission for Discipline Inspection issued the Accountability Regulations of the Communist Party of China (the “Regulations”). The Regulations specify the intra-Party accountability mechanism for the serious consequences caused by mistakes, negligence and even poor work performance or leadership. The possible punishment includes circulating a notice of criticism within certain scope of the Party, admonishing, position adjustment and disciplinary sanction. In addition, relevant officers will be held responsible for life, even after their job adjustment, promotion or retirement. The Regulations were approved by the Political Bureau of Communist Party of China Central Committee on June 28, 2016.

2. Upcoming laws or regulations

No developments.

3. Government Action

(1) On July 8, 2016, Wei Huaizhong (“Wei”), the former Deputy Minister of the Propaganda Department of Haidian District Party Committee, was sentenced to four years’ imprisonment for bribe-taking by Beijing No. 4 Intermediate People’s Court and was fined RMB 300,000 (USD 45,264).

From 2008 to 2011, Wei was responsible for handling local cultural affairs, during which period he took advantage of his position to assist three companies in applying for special funds from Cultural Development of Haidian District. As a consequence, these companies succeeded in obtaining the allocation of special funds of RMB 3.95 million (USD 595,983). In return, Wei accepted bribes amounting to RMB 1.38 million (USD 208,217) in the form of a commercial contract between one of the three company and a company controlled by one of his relatives. Wei was given a lighter sentence due to his repentance and the refund of illegal proceeds.

(2) It was reported on July 12, 2016, that Hou Duanmin (“Hou”), the former Secretary of the Party Committee of Jining Medical College (the “College”), was sentenced by the Intermediate People’s Court of Weifang City to 11 years in prison for bribe-taking, plus a fine of RMB 600,000 (USD 90,529).

The prosecutor accused Hou of being involved in 28 bribery events from 2002 to the end of 2014, during which period Hou accepted illegal proceeds over RMB 3.13 million (USD 472,260) in total. Originally, the amount of accepted bribes remained relatively low, but things changed soon after his assumption of duties at Jining Medical College, where he received a large number of kickbacks from drug sales to the related hospitals affiliated with the College. Together with his wife, the couple took 70% of the profits generated from such drug sales.

(3) On July 12, 2016, Ji Haiyi (“Ji”), the former Secretary of Party Committee of Sunhe County, Chaoyang District, Beijing was sentenced to life imprisonment by Beijing No. 3 Intermediate People’s Court for accepting bribes approaching RMB 60 million (USD 9.05 million).

During Ji’s term of office from 2005 to 2011, he took advantage of his position to assist several companies and individuals in project contracts, company operations, and compensation for demolition and relocation. In exchange, Ji, individually and jointly with others, accepted properties valuing over RMB 59.32 million (USD 8.95 million) in the form of cash and real property from 11 individuals.

(4) It was reported on July 14, 2016, that Liu Qingcheng (“Liu”), the former Principal of Jiangxi East China University of Technology, was sentenced to 15 years imprisonment for taking bribes by the Intermediate People’s Court of Ji’an City, Jiangxi Province, plus a fine of RMB 1 million (USD 150,881).

According to the prosecution, from December 2002 to May 2014, Liu took advantage of his position to seek illegal benefits for others in campus project bidding, project construction, job arrangement, equipment purchase, etc., and cumulatively accepted bribes exceeding RMB 8.7 million (USD 1.31 million). Liu said he would appeal against the judgment.

(5) On July 25, Guo Boxiong (“Guo”), the former Deputy Chairman of Central Military Commission, was sentenced to life in prison for accepting bribes by the Military Court, deprived of political rights for life and the rank of general, and all of his personal property was confiscated.

4. Other

No developments.

5. China-related FCPA Action

None

Serious Fraud Office Publishes New Guidance on the Presence of Lawyers at Section 2 Criminal Interviews

The Serious Fraud Office (SFO) has published new guidance on the presence of lawyers at section 2 interviews in criminal investigations conducted under section 2 of the Criminal Justice Act 1987, typically with potential witnesses.

The SFO guidance follows the decision of R (Lord and Others) v SFO[1], in which it was ruled that the SFO had been entitled to exclude lawyers, acting for a company under investigation, from also representing employees of that company who were not suspects at their section 2 witness interviews.  There is very clearly a fine line between balancing the interests of the employee with those of a company.

The SFO guidance, however, goes a great deal further than this decision.  Under the new guidance, a lawyer is only permitted to attend a section 2 interview if they meet certain ‘ground rules’; that is if the SFO case controller believes that they:

  1. will assist the purpose of the interview and/or investigation; or
  2. provide essential assistance to the interview by way of legal advice or pastoral support.

The right to have a lawyer present in a criminal interview has been a long standing right and is fundamental to a just and fair judicial system.  The SFO guidance goes some way to fetter this right as the discretion is on the part of the SFO to determine what the purpose of the interview and/or investigation is.

What does “essential assistance” mean?  This term is undefined.  The only clarification of “essential assistance” in the SFO guidance is that it does not equate to anything that “undermines the free flow of information” unless for the purposes of “protecting or maintaining the interviewee’s legal professional privilege”, which suggests it will be interpreted restrictively.

Should a lawyer seek to attend a section 2 interview with an interviewee, they must serve on the SFO, in advance of the interview, their reasons why they should be present; written acknowledgment of the SFO guidance ground rules; and a series of written undertakings by the lawyer’s firm, one of which is that the lawyer does not discuss the contents of the interview with any third party, including the company, without the SFO’s prior written consent.

These requirements are overtly prescriptive in light of the fact lawyers are already subject to Rules of Conduct by the Solicitors Regulation Authority and, ultimately, they may mean that lawyers are excluded from attending section 2 interviews, which would give rise to numerous challenges.  Without lawyers being able to interject or intervene at an interview regarding the interview process, or to advise the witness of their legal rights, witnesses are at risk of giving inconsistent and unclear information which does not assist the investigation and, potentially, being lead into criminal liability.  A witness’ lack of valid legal representation (either because their lawyer is excluded from attending or has an almost entirely passive role in exchange for the privilege of attending) could also mean that witnesses are less inclined to cooperate in an interview and/or investigation.

The new guidance seems to create an antagonistic and unhelpful approach with regards to witnesses and their lawyers and is seemingly in conflict with the SFO’s statement at the start of the new guidance that “interviews under section 2 must be conducted with great care to ensure that they are carried out fairly.”

The SFO has shown its teeth recently and made some good improvements, but it could be said that this new guidance is overstepping the mark.  It will be interesting to see the extent to which the guidance is relied on by the SFO in practice or whether the guidance is challenged.

[1] [2005] EWHC 865 (Admin)

The Act on Fighting Corruption in the Healthcare Sector

On 29 July 2015, the German government introduced a legislative initiative with the aim of fighting corruption in the healthcare sector. On 4 June 2016, the German Act on Fighting Corruption in the Healthcare Sector (Gesetz zur Bekämpfung der Korruption im Gesundheitswesen – Act) entered into effect under which the criminal offences of taking and giving bribes in the healthcare sector were incorporated into the German Criminal Code (StGB) as sections 299a and 299b. These new regulations could have a substantial impact on companies, as giving bribes to self-employed healthcare professionals is now considered a criminal corruption offence.

To read the full alert, click here.

Monthly China Anti-Bribery Update Report — June 2016

1. New laws or regulations

State level: No developments.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules: No developments.

2. Upcoming laws or regulations

No developments.

3. Government Action

(1) In early June, Zhang Longjun (“Zhang”), the former Dean of Shangyu Traditional Chinese Medicine Hospital (the “Hospital”), together with Chen An (“Chen”) and Zhao Zhigang (“Zhao”), the former Vice Dean of the Hospital, were respectively sentenced to ten years’, two years’ and eight months’ imprisonment respectively for taking bribes by the People’s Court of Shangyu District, Shaoxing City, Zhejiang Province. Additionally, Zhang, Chen, and Zhao were fined RMB 1.8 million (USD 270,148), RMB 300,000 (USD 45,024) and RMB 350,000 (USD 52,528) respectively.

Zhang was found to have manipulated medical supplies, job promotion arrangements, and medical resource allocations in return for illegal proceeds including RMB 3.83 million (USD 574,816), HKD 123,000 (USD 105,629), and USD 1,000 in cash, while Chen and Zhao were found to have accepted bribes of RMB 646,300 (USD 96,998) and RMB 700,000 (USD 105,057) respectively.

(2) On June 15, 2016, Ding Fengyun (“Ding”), the former Party Committee Secretary of Linyi University, was tried for embezzlement and bribe-taking by Intermediate People’s Court of Heze City, Shandong Province.

The prosecutor asserted that during her term of office from August 2010 to December 2012, Ding took advantage of her positions as the Member of Linyi Municipal Standing Committee, as the Director of the Propaganda Department of Linyi City, and as Party Committee Secretary of Linyi University to, independently or in collusion with others, embezzle public funds totaling more than RMB 7.58 million (USD 1.13 million). Ding was also found guilty of seeking illegal benefits for other individuals or entities in bidding processes, promotions or adjustments of job titles, and company restructurings by taking advantage of her multiple positions in exchange for bribes in the form of cash and shopping or debit cards amounting to RMB 1.26 million (USD 189,104).

The court determined that it would announce its judgement on another given day.

(3) On June 16, 2016, Bai Enpei (“Bai”), the former Vice Chairman of the Environmental and Resources Protection Committee of the National People’s Congress, was tried by the Intermediate People’s Court of Anyang City, Henan Province for taking bribes and holding a large amount of property from unidentified sources.

Allegedly, during his term of office from 2000 to 2013, Bai took advantage of his positions as the Secretary of Qinghai Province Party Committee, the Secretary of Yunnan Province Party Committee, and the vice chairman of the Environmental and Resources Protection Committee of National People’s Congress by furnishing assistance to 17 companies and individuals in engineering construction, real estate development, access to mineral rights, and title promotions. Bai, directly or indirectly through his wife, obtained illegal properties from the above companies and individuals exceeding RMB 246 million (USD 36.9 million) in total. Further, the amount of Bai’s family property and expenditure significantly exceeded his legitimate income, and Bai failed to explain the source of such property.

Bai pleaded guilty during the trial. The court said that it would announce its judgement on another day.

(4) On June 29, 2016, Wang Hanshen (“Wang”), the former Party Member of Yiwu Municipal People’s Government of Zhejiang Province was sentenced by the Jindong District People’s Court of Yiwu City to 10 years’ and 6 months’ imprisonment for taking bribes, plus the fines of RMB 1 million (USD 150,082).

Wang was accused of taking advantage of his position from 2007 to 2009 in seeking illegal benefits for others in exchange for bribes amounting to RMB 5.52 million (USD 828,455). Wang was given a lighter sentence due to his confession and his return of the illegal gains.
4. Other

No developments.

Monthly China Anti-Bribery Update Report — May 2016

1. New laws or regulations

State level: No developments.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules: No developments.

2. Upcoming laws or regulations

No developments.

3. Government Action

(1) It was reported on May 6, 2016 that Wang Tianchao (“Wang”), the former President of Yunnan First People’s Hospital, was prosecuted by Pu’er Municipal People’s Procuratorate of Yunnan Province for bribery. Yunnan Commission for Discipline Inspection reported this case as “a typical case of corruption with an adverse impact for the health sector”. The total amount involved in this case is up to RMB 129 million (USD 19.62 million).

The prosecutor asserted that from 2004 to 2014, Wang obtained improper benefits including RMB 45 million (USD 6.84 million) in cash, 100 units of real estate together with 100 parking spaces valued in the aggregate at RMB 84 million (USD 12.78 million) in exchange for abusing his position to seek illegal benefits for bribe-givers in connection with construction projects, medical equipment, medicine procurement, and the appointment of personnel.

(2) On May 17, 2016, Xu Liming (“Xu”), the former Director of Guangxi Zhuang Autonomous Region People’s Government Guangzhou Office was sentenced by the Intermediate People’s Court of Hechi City, Guangxi to 10 years’ imprisonment for accepting bribes, as well as confiscation of illegal proceeds of RMB 3.53 million (USD 537,151) and penalties of RMB 500,000 (USD 76,083).

During Xu’s term in office from 2004 to 2008, he abused his positions to seek illegal benefits for various entities and individuals in contracting projects, project payment settlement, investment attraction and job promotions. In return Xu received bribes up to RMB 3.78 million (USD 576,715). In light of Xu’s voluntary confession and return of the proceeds of his crimes, he was given a more lenient sentence.

(3) On May 23, 2016, Li Yunzhong (“Li”), the life sentence of the former Vice Secretary of Qujing Municipal Party Committee, Yunnan Province was affirmed by the Higher People’s Court of Yunan Province. Li had been found guilty of accepting bribes of more than RMB 40 million (USD 6.08 million). This case had received prominent attention from the Central Commission for Discipline Inspection because it involved abuse over a long span of time, very substantial sums of money, and a large number of people.

Li was accused of taking bribes of RMB 40.17 million (USD 6.11 million) in cash and 150 cartons of cigarettes valued at RMB 96,000 (USD 14,608) from dozens of individuals. In return he sought illegal benefits for them in contract projects and in the allocation of project funds. The ill-gotten gains were used by Li to purchase real estate and vehicles as well as for loan-sharking.

(4) It was reported on May 24, 2016 that Hong Jiaxiang (“Hong”), a former Member of the Standing Committee of Ningbo City Committee of the Communist Party and the former Head of the Publicity Department had been sentenced by the Intermediate People’s Court of Shaoxing City, Zhejiang Province to 11 years’ in prison and fined RMB 600,000 (USD 91,300) for bribe-taking.

The court found that during Hong’s term in office from 2006 to 2013, he took advantage of his various positions to seek benefits in the promotion of real estate projects, project planning approvals, and enterprise operation for selected entities and individuals. In return, Hong illegally received cash and properties from such persons through pre-declaration of dividends, distributions of profits, and the sale of properties at a relatively high price. These aggregated to RMB 8.34 million (USD 1.26 million). Hong was given a more lenient sentence due to his voluntary confession and his return of the proceeds in whole.

(5) On May 30, 2016, Huang Deyi (“Huang”), the former Deputy Mayor of Baise City, Guangxi Zhuang Autonomous Region, was sentenced by the Intermediate People’s Court of Hechi City, Guangxi to ten years and six months in prison for accepting bribes and abuse of power, plus fines of RMB 500,000 (USD 76,083).

Huang was found guilty of providing illegal assistance to others during his term of office from 2007 to September 2013 in exchange for bribes including RMB 3.9 million (USD 593,453), HKD 400,000 (USD 338,496) and 3 kilograms of gold.

4. Other

No developments.

5. China-related FCPA Action

No developments.

Monthly China Anti-Bribery Update Report — April 2016

1. New laws or regulations

State level:

(1) On April 18, 2016, the Supreme People’s Court and Supreme People’s Procuratorate promulgated Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate on Certain Issues Concerning the Application of Law in Handling Criminal Cases Involving Embezzlement and Bribery (the “Interpretations”). Key highlights of the Interpretations include the following (i) expanding the definition of bribes to include certain intangible benefits, (ii) clarifying that bribes may be given even after the benefits have been received by the bribe-makers, (iii) establishing monetary thresholds and standards for bribery prosecutions, including raising the thresholds for bribes involving government officials and non-government officials, and (iv) providing additional details on the requirements and benefits of voluntary disclosure.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules: No developments

2. Upcoming laws or regulations

No developments.

3. Government Action

(1) On April 6, 2016, Zhou Yuehai (“Zhou”), the former Member of Standing Committee of Communist Party and Vice Manager of China Southern Airlines, was tried by the Intermediate People’s Court of Shenzhen, Guangdong Province on charges of taking bribes, including cash amounting to RMB 480,000 (USD 73,629), HKD 100,000 (USD 12,883), USD 5,000, and one Cartier Platinum necklace.

The prosecutor accused Zhou, as a state functionary, of taking advantage of his position for the benefits of others and illegally misappropriating properties in a very large amount. Zhou pleaded guilty, but the case is still on trial. The former General Accountant of China Southern Airlines, Xu Jiebo, was on trial with Zhou.

(2) On April 14, 2016, Jiang Shan (“Jiang”), the former Secretary of Municipal Party Committee of Chuzhou, Anhui Province, was tried by the Intermediate People’s Court of Wuhu City, Anhui Province for taking bribes. The prosecutor alleged that, from 1999 to 2013, Jiang took advantage of his position and illegally accepted properties valued at RMB 4,339,000 (USD 665,577) for the benefit of bribe-givers. Jiang was further charged with abusing his authority by reducing or exempting land grant fees illegally, causing economic loss to the State amounting to RMB 160 million (USD 24.54 million). Given the complexities of this case, the court has not yet made the judgment on another given day.

(3) On April 18, 2016, Feng Runshen (“Feng”), the former Vice President of Chinese People’s Political Consultative Conference of Kaiping City, Guangdong Province, was sentenced to two years’ imprisonment with three years’ probation by the Intermediate People’s Court of Jiangmen City, Guangdong Province for accepting bribes totaling RMB 80,000 (USD 12,271), plus confiscation of his personal properties valuing RMB 50,000 (USD 7,669). This case was one of the seven cases of the Special Action of International Pursuit against Duty Criminal announced by Supreme People’s Procuratorate.

The court found that during his term in office, Feng took advantage of his position in promoting products of a concrete-manufacturing company and helping it to pass relevant product quality inspections. In return, Feng received cash amounting to RMB 80,000 (USD 12,271) from the legal representative and several shareholders of said company. Feng was given probation due to his voluntary confession, return of all illegal gains, and his voluntary payment of fines.

(4) On April 20, 2016, Su ChangCheng (“Su”), the former employee of the New Rural Cooperative Medical Management center in Huoshan County, Hanhui Province, was sentenced to 6-months’ imprisonment by Huoshan People’s Court for corruption, plus confiscation of his personal property valued at RMB 100,000 (USD 15,339). This is the first case after the promulgation of the new Interpretations noted above. Relevant experts said that Su would have received a sentence of more than 5 years’ imprisonment before the promulgation of the new Interpretations.

The court found that during his two years of service, Su took advantage of his position and bought fake invoices for reimbursements aggregating to RMB 790,000 (USD 121,181). Su was given a lighter sentence due to his voluntary confession and the return of illegal gains before prosecution.
4. Other

No developments.

LexBlog