II JURISPRUDENCE OF ANTI-BRIBERY LAWS AND REGULATIONS IN THE PRC
Anti-bribery and anti-commercial bribery laws are found in China’s criminal laws, administrative laws, and economic laws, as well as in the disciplinary rules of the CPC and in international treaties to which China has acceded.
A. PRC Criminal Law and Judicial Interpretations
The PRC criminal justice system does not include a specific crime or accusation on “corruption”; instead, a prohibition of corruption is incorporated into several categories of crimes based on various standards, such as the status and position of the giver and of the recipient of the bribe. Pursuant to the PRC Criminal Law (Criminal Law), bribery crimes include: (1) the crime of bribe-accepting by non-state staff (Article 163 of the Criminal Law); (2) the crime of bribe-offering to non-state staff (Article 164 (1) of the Criminal Law); (3) the crime of bribe-offering to officials of foreign governments and international public organizations (Article 164 (2) of the Criminal Law); (4) the crime of bribe-accepting (Article 385 of the Criminal Law); (5) the crime of bribe-accepting by a unit (Article 387 of the Criminal Law); (6) the crime of bribe-accepting through influence (Article 387 of the Criminal Law); (7) the crime of bribe-offering (Article 389 of the Criminal Law); (8) the crime of bribe-offering to a unit (Article 391 of the Criminal Law); (9) the crime of bribing as an intermediary (Article 392 of the Criminal Law); and (10) the crime of bribe-offering by a unit (Article 393 of the Criminal Law).
The Criminal Law does not differentiate commercial bribery crimes from other public official bribery crimes. Accordingly, public official bribery and commercial bribery (including bribery of public officials regarding commercial communications or transactions) usually are identified under the same articles of the Criminal Law. Pursuant to Section 1 of the Opinions on Issues concerning the Application of Law in the Handling of Criminal Cases of Commercial Bribery[1] (Commercial Bribery Opinions) jointly issued by the Supreme People’s Court (SPC) and the Supreme People’s Procuratorate (SPP) in November 2008, the SPC and the SPP affirmed that “commercial” bribery crimes involve all crimes listed in the above paragraph. In essence, official bribery crimes and commercial bribery crimes share identical constitutive elements.
B. Anti-Unfair Competition Law and Relevant Provisions in Other Laws
The laws of anti-commercial bribery other than those under the Criminal Laws mainly include the Anti Unfair Competition Law of the People’s Republic of China (Anti-Unfair Competition Law) and related regulations, relevant provisions under economic laws, administrative laws and regulations, relevant regulations of the State Council, and other official decisions.
In certain industries, such as the medical industry, the administrative authorities have also promulgated regulatory rules against commercial bribery, subject to the provisions of the Anti-Unfair Competition Law.
- Anti-Unfair Competition Law and Interim Provisions on Prohibition of Commercial Bribery
The laws of anti-commercial bribery that are the most important, commonly used and frequently cited, mainly include:
• the Anti-Unfair Competition Law, adopted by the Third Session of the Standing Commit-tee of the Eighth National People’s Congress on September 2, 1993;
• the Interim Provisions on Banning Commercial Bribery adopted upon deliberation at the executive meeting of the State Administration of Industry and Commerce (SAIC) on No-vember 15, 1996 (Interim Provisions); and,
• rules and normative documents issued by the SAIC.
Violations of these three sources may trigger administrative sanctions. The SAIC (or local AICs at lower levels) supervises and implements the Anti-Unfair Competition Law and metes out administrative sanctions for commercial bribery.
The Anti-Unfair Competition Law sets forth the general provisions on anti-commercial bribery. It provides that a business operator shall not resort to bribery, by offering money or property or by any other means, in selling or purchasing commodities. It also prohibits off-the-books rebates, but it allows discounts and commissions, provided that the business operator who accepts the discount or the commission must also truthfully record it in the account books. The Anti-Unfair Competition Law also provides that the SAIC’s or AIC’s supervision and inspection department may impose a fine of not less than RMB10,000 but not more than RMB200,000 in consideration of the circumstances and may confiscate the illegal earnings, if any. In 1996, the SAIC enacted the Interim Provisions in accordance with the relevant provisions of the Anti-Unfair Competition Law. The Interim Provisions define “commercial bribery” as a business operator’s act of bribing the other party (entity or individual) with property or by other means for the purposes of selling or purchasing commodities, and provides detailed definitions of “property” and “by other means.” No entity or individual may, when selling or purchasing commodities, accept or demand a bribe. Any business operator that secretly offers a rebate off the account books to the other party shall be treated as having offered bribes and shall be punished accordingly; the other party that secretly accepts a rebate off the account books shall be treated as having accepted bribes and shall be punished accordingly as well. In commodity transactions, if the business operator offers a discount or commission to the other party, and both the giver and receiver truly record such discount or commission in the account books, such conduct will not be regarded as commercial bribery. The business operators are also allowed to present small advertising gifts to the other party during business transactions according to business practices.
As for the specific area of the pharmaceutical industry, the State Pharmaceutical Administration promulgated “Certain Provisions on Anti-Unfair Competition in the Pharmaceutical Industry” in 1993. Pharmaceutical manufacturers or distributors may not offer money, valuables, travel opportunities, reimbursement of costs or otherwise induce its counterpart to purchase pharmaceutical products. Any payments to the counterpart that are not recorded in the company’s books and records are deemed to be bribery. In a “Reply of the State Administration for Industry and Commerce to Whether or Not Non-Profit Making Medical Institutions Shall Be Subject To the Anti-Unfair Competition Law” issued in 1995, SAIC made clear that any medical institution that accepts a rebate in purchasing pharmaceuticals or other medical supplies, shall be subject to investigation and punishment in accordance with the Anti-Unfair Competition Law.
Regarding educational institutions, in a Reply to the Jiangxi AIC in 2006, the SAIC stated that a school, public or private, that accepts a commercial bribe offered by a product seller when purchasing the products (including books) may be subject to punishment in accordance with the relevant provisions of the Anti-Unfair Competition Law and the Interim Provisions of the State Administration for Industry and Commerce on Prohibition of Commercial Bribery. - Economic Laws
In the field of economic laws, the provisions of anti-bribery are scattered in different laws. Most of these laws do not have specific provisions on anti-bribery, but instead contain some anti-bribery principles. For example:
(1) the Insurance Law forbids insurance companies, insurance agents, brokers or their practi-tioners from giving or promising to give premium rebates or other benefits, which are not specified in the insurance contract, to an insurance applicant, insured or beneficiary;
(2) the Law on Bid Invitation and Bidding articulates that bidders are prohibited from bribing the bid inviter or members of the bid evaluation committee for the purpose of winning the bid. Where a bidder wins a bid through colluding with other bidders or with the bid inviter in matters of bidding, or through bribing the bid inviter or members of the bid evaluation committee, the bid won shall be nullified and the bidder shall be fined or prosecuted in a serious case;
(3) the Law on Commercial Banks prohibits the employees of commercial banks from taking advantage of their positions to demand, receive or accept bribes, or receive or accept re-bates or commissions;
(4) the Pricing Law prohibits the officials in charge of pricing from demanding and accept-ing bribes; and
(5) the Construction Law prohibits taking bribes or commissions or demanding any other benefits in the construction projects;
(6) the Tourism Law prohibits tourism operators from giving or accepting a bribe in selling or purchasing commodities or services. These laws, instead of directly specifying the legal consequences of bribery, refer these bribery acts to criminal liabilities or administrative sanctions. - Administrative Laws
The anti-bribery provisions are also sporadically provided in different administrative laws and regulations. For example:
(1) the Administrative Licensing Law provides that if administrative permission was obtained by a person through bribery, such permission shall be revoked;
(2) the Law on Public Servants prohibits public servants from corruption, offering or ac-cepting bribes, or seeking personal gains or benefits for another person by taking ad-vantage of an official position;
(3) the Law of Government Procurement prohibits the providers offering bribes to the pur-chaser, procurement agency, bid appraising committee, competitive negotiating group or inquiry group; and prohibits the procurement agency from offering bribes to the pur-chaser to seek illegal benefits;
(4) the Law on the Administration of Tax Collection prohibits tax officials from extorting or taking a bribe; and
(5) the Anti-Money Laundering Law provides that one of the purposes of this law is associ-ated with the prevention and punishment of the crime of bribery. Similar to the economic laws, these laws only establish the principles of prohibitions on bribery without directly specifying the legal consequences of bribery, and refer the acts of bribery to criminal lia-bilities or administrative sanctions.
C. International Treaties
The United Nations General Assembly adopted the United Nations Convention Against Corruption (UNCAC)[2] on October 31, 2003, in order to promote and strengthen measures to prevent and combat corruption more efficiently and effectively, and to promote, facilitate and support international cooperation and technical assistance in the prevention of, and fight against, corruption. The UNCAC was opened for signature during December 9-11, 2003. As a member state of the United Nations, China signed UNCAC on December 10, 2003. Pursuant to the UNCAC, China shall, in accordance with the fundamental principles of its legal system, develop, maintain, and implement effective anti-corruption policies that promote the participation of society and reflect the principles of the rule of law, proper management of public affairs and public property, integrity, transparency and accountability. China shall also collaborate with other countries and relevant international and regional organizations in promoting and developing the measures of anti-corruption indicated in the UNCAC as appropriate and in accordance with the fundamental principles of the Chinese legal system. China adopted the UNCAC on October 27, 2005, and the UNCAC came into effect in China on February 12, 2006.[3]
With respect to anti-money laundering, China also joined the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (signed on December 20, 1988 and adopted on September 4, 1989), the United Nations Convention against Transnational Organized Crime (signed on December 12, 2000 and adopted on August 27, 2003), and the International Convention for the Suppression of the Financing of Terrorism (signed on December 9, 1999 and adopted on February 28, 2006).
Since the adoption of the UNCAC, China has cooperated with various international organizations, such as the United Nations, the European Union, the World Bank, the Asian Development Bank, and the Organization for Economic Co-operation and Development in the area of anti-corruption. China also has actively participated in G20 and APEC anti-corruption efforts. In 2014, APEC members adopted the Beijing Declaration on Fighting Corruption to promote a cross-border enforcement network so as to strengthen transnational anti-corruption cooperation. China has also collaborated with different countries on law enforcement cooperation, judicial assistance, and repatriation. And in 2006, SPP initiated the establishment of the International Association of Anti-Corruption Authorities, which is the first international organization with members of national or regional anti-corruption authorities worldwide.
China has also signed various multilateral or bilateral international treaties on anti-corruption. In 1993, China signed its first bilateral extradition treaty with Thailand. In 2000, China adopted the Extradition Law of the People’s Republic of China at the 19th session of the Standing Committee of the 9th National People’s Congress, which provides the legal basis in domestic laws for China’s extradition arrangements with other countries. As of 2014, China has entered into about 40 bilateral extradition treaties with different countries and more than 100 judicial assistance arrangements have been signed by the CCDI and the Ministry of Supervision of the People’s Republic of China with other countries and regions worldwide, such as Russia, Italy, the United Arab Emirates, Japan, New Zealand, Mexico, and Argentina.
In Sino-American relations, law enforcement cooperation has increased. The U.S.-China Joint Liaison Group on Law Enforcement Cooperation (JLG) was established in May 1998. In June 2000, China signed the Agreement Between China and the United States on Criminal Judicial Assistance. On December 5, 2014, the 12th Meeting of the US-China JLG was held in Beijing, where both countries reviewed the overall performance on law enforcement cooperation in 2013 and promised to continue to strengthen cooperation on reorganization, repatriation, or prosecution of fugitives, asset return, drug control, and intellectual property protection. The Ministry of Public Security of China and the U.S. Federal Bureau of Investigation have signed several memorandums of understanding, including those on anti-terrorism information exchange and cooperation, anti-cyber-crimes, and drug control.
D. Disciplinary Rules of the Communist Party of China (CPC)
The CPC issued the Regulation of the Communist Party of China on Disciplinary Actions in 2003, which specified five possible disciplinary sanctions against CPC members, namely warning, serious warning, removal from their Party positions, probation within the Party, and expulsion from the Party. As for disciplinary actions against public officials, China also issued the Regulation on Disciplinary Actions against Public Officers, which provides six actions against public officers, namely warning, demerit, gross demerit, demotion, dismissal from office, and expulsion. In 2007, the CCDI issued the Several Provisions on Prohibition of Abuse of Authority for Improper Gains. These strictly prohibit the activities of abuse of authority, which include the following in relation to persons seeking improper benefits:
(1) accepting property, such as purchasing automobiles or real estate at an unreasonably low price;
(2) receiving shares or stock;
(3) obtaining profits through a “cooperative investment” or “joint establishment of compa-ny” with the sole contribution from the person seeking improper benefit;
(4) obtaining profits without actual investment or obtaining unreasonably high “profits” from investments;
(5) accepting money or property for gambling or speculation;
(6) requesting or accepting “no-show” employment for an affiliated person;
(7) accepting gifts and property through a third party;
(8) accepting property after retirement based on prior agreements; or
(9) accepting or using property such as a house or automobiles in the name of the person seeking the benefit. Immediately returning or submitting the accepted property to the au-thorities absolves the violator from punishment, unless the person is already being inves-tigated by authorities.
E. Policies
The Central Committee of the CPC and the State Council of China have issued a series of rules and regulations on anti-corruption. On February 8, 2006, the General Office of the Central Committee of the CPC and the General Office of the State Council jointly issued the Opinion on the Project Work for Governing Commercial Bribery, setting up a leading group governing commercial bribery. The Communist Party of China 52 Code of Ethics, which was drafted in 1997 and went into effect in 2010, strictly prohibits leading Party cadres from participating in commercial activities or abusing their powers or influence for improper gains. CPC 52 Code of Ethics constitutes the fundamental disciplinary internal rules for the CPC. In 2009, the Central Committee and the State Council jointly issued the Several Provisions for Probity Practice of Leaders of the State-owned Enterprises (Interim), which strictly prohibit leaders of the state-owned enterprises from realizing improper gains through their public authority.
In addition, CPC issued the Regulations on Registration of Gifts Received in Domestic Activities by Members of CPC and Public Officers, which strictly prohibit leading Party cadres or public officers from receiving gifts which could influence their impartiality in performing their duties. CPC also issued the Regulations on Reports of Personal Matters of Leading Cadres, which request the leading cadres to report true information about their income, real estate and investments, as well as those of their spouses and children. Since the 18th CPC National Congress in 2012, CPC has specified eight rules and six prohibitions on anti-corruption.
[1] No. 2008-33 of the SPC, promulgated by the SPC and the SPP on Nov. 20, 2008.
[2] The United Nations Convention against Corruption (UNCAC) was adopted by the United Nations General Assembly on October 31, 2003 by UN Resolution 58/4.
[3] See Decision of the Standing Committee of the National People’s Congress on Ratifying the United Nations Convention Against Corruption. It was decided at the 18th session of the Standing Committee of the Tenth National People’s Congress to ratify the United Nations Convention Against Corruption; meanwhile, it was declared that the People’s Republic of China is not bound by Paragraph 2 of Article 66 (Settlement of disputes) of the United Nations Convention Against Corruption.