d. The Definition, Extension, and Prosecution of “Bribes”
The Criminal Law uses the words “money or property” to describe the bribe itself. But in judicial practice, “money or property” is interpreted to be any valuable item that may have monetary or property benefits, such as providing housing decorations, membership cards containing money, shopping cards with money, or travel expenses.[1] As long as these cards or coupons containing money are accepted regardless of being used or not, they would be regarded as bribes.[2]
Accordingly, in judicial practice, the following forms of monetary or property benefits would be regarded as a bribe: an unreasonable discount in transactions, free shares, investment dividends, proceeds from entrustment investment in securities or futures or any other financial management, or funds in the guise of gambling, faked wages, or salary.[3] In People v. Pan Yumei and Chen Ning,[4] for example, the High Court of Jiangsu Province held that where a state official was offered “profits” in the name of “jointly running” a company together with the briber, but did not actually make any contribution to or participate in the business operations of the company, such profits were deemed to be a bribe.
In order to combat all kinds of commercial bribery in practice, the official Central Leading Group for Combating Commercial Bribery[5] further discusses the definition of a commercial bribe in the Opinions on Correctly Handling the Policy Boundaries in Combating Commercial Bribery[6](Combating Commercial Bribery Policy), which guides the works of courts, procuratorates, public security bureaus and other public institutions. The Combating Commercial Bribery Policy makes clear that the various forms of commercial bribes include: (1) offering commercial sponsorship, travelling, business trips, and other such activities in violation of principles of fair competition; (2) offering membership cards, consumer cards (coupons), shopping cards (coupons), and other negotiable securities; (3) offering houses or vehicles as gifts or for using them; (4) providing free shares or free dividends; (5) providing funds in the guise of gambling; (6) providing money, property, or other interest in the guise of fees of sale promotion, publicity, advertising, training, advising, consultancy, technical services, research and development, or clinical trials; (7) giving the opportunity of trading or providing services, favorable conditions, or other economic interests.
Offering commercial bribes results in criminal liability when the value of the bribe exceeds a certain amount. According to the Offering Bribes Interpretation, as long as the amount of bribery reaches RMB10,000, the briber shall be subject to criminal liability under Article 389 of the Criminal Law. And if the briber offers bribes on multiple occasions without being sanctioned, he would be punished on the basis of the cumulative amounts of bribes.
e. Identification of “Unit” Bribery Crimes
Under the Criminal Law, unit crimes refer to crimes committed by corporations or other entities that are deemed to commit an act that endangers society.[7] As any unit’s act needs to be carried out by the individual persons that are its officers, directors, employees, or agents, an important issue is how to differentiate acts of a unit or acts of its members. Under Chinese law, the key is how to identify the unit’s “will.”[8]
The two decisive elements of the concept of “unit will” are the elements of (1) decision-making and (2) the attribution of benefits.[9] The SPC and SPP both hold that crimes by a unit can be shown if the following characteristics are met: (1) the crime is committed in the name of the unit, that is, it is decided through collective discussion of the unit, or is decided or consented to by persons in charge of the unit or other persons authorized by the unit; and (2) the illegitimate benefits from the alleged crime were sought for the unit or the majority of the illegal proceeds are owned by such unit.[10]
In the Huang Guangyu case, Huang, the legal representative of the Gome, bribed state staff in order to obtain an illegitimate procedural benefit for the Gome. As the foresaid two characteristics were met, the No.2 Intermediate Court of Beijing held that the Gome was guilty of bribe-offering by a unit.
In comparison, in People v. Wang Hanning the Intermediate Court of Chuzou found that although Mr. Wang bribed state staff in the name of Tailian Co., the illegal proceeds never entered into Tailian’s account but were instead administered and used by Mr. Wang for his personal benefit. As a result, Mr. Wang was guilty of bribe-offering, rather than Tailian Co.
When demystifying unit crimes, Prof. LI Hong indicates that unit crimes are not limited to society-endangering acts by units. They also cover acts committed by members of the unit when undertaking a unit’s business where such acts were possible due to the unit’s ineffective and inadequate supervision by representatives or members of such unit or caused by a unit’s internal system (including its ethos, philosophy, personality, routine, or policy).[11] In People v. Shenzhen Zhenhua Industrial Co. (Zhenhua),[12] the CEO of Zhenhua knew that his staff were making fake declarations for imports but he did not stop them. The Intermediate Court of Guangzhou held the Zhenhua unit guilty of smuggling, due to the CEO’s inadequate supervision. And in People v. Luoyang Weijian Pharmaceutical Co. (Weijian),[13] the District Procuratorate of Chanhe held that the Weijian unit paid its sales agents huge commissions, which were up to 40 percent of the gross profits of its pharmaceutical equipment, and that this unreasonable sales system seduced its sales agents to bribe individuals who were in charge of procurement of equipment in hospitals for advancing sales performance.
The concepts of vicarious criminal liability for units— “legal entities” in western jurisprudence—and the possibility that units’ legal liability under anti-corruption laws can turn on whether managers take appropriate action to promote compliance with the law or on whether effective internal controls are in place should be familiar to western observers familiar with this book’s description of similar concepts under the U.S. Foreign Corrupt Practices Act and other laws.
f. Bipartite Punishment System
The bipartite punishment system is a punishment system regarding unit crimes under which the unit committing criminal conduct shall be penalized with a fine and involved supervisors and wrongdoers shall assume criminal liability.[14]
The unit committing bribe-offering shall be fined and the supervisor and wrongdoer shall be sentenced to a fixed term of imprisonment for no more than five years or given criminal detention.[15] In the Huang Guangyu case, for example, the Gome unit was fined RMB5,000,000, while Huang was sentenced to two years’ imprisonment for the crime of bribe-offering by a unit.
In the anti-corruption campaign in China’s football area, Qingdao Hailifeng FC Holding Ltd. and Chengdu Blades FC Co. were found guilty of bribing football players of other football clubs in exchange for winning league games. In People v. Qingdao Hailifeng FC Holding Ltd. and Chengdu Blades FC Co.,[16] the two football clubs were fined RMB2,000,000 and RMB60,000, respectively, for bribe-offering to non-state staff. Their involved employees and other accomplices, in total 14 persons, as the “supervisors” and “wrongdoers” responsible for the bribery, were sentenced to imprisonment. In judicial practice, “supervisors” refers to individuals who decide, approve, authorize, connive at, or direct to carry out criminal acts, usually including legal representatives, chief executives, vice executives and division directors, etc. “Wrongdoers” refers to those who play a major role in carrying out criminal acts, including both managerial personnel and normal employees.[17]
Under the Criminal Law, the supervisor and wrongdoer would not be fined in unit crimes of bribery (even though the supervisors and wrongdoers can be imprisoned). According to a proposed Amendment IX to the Criminal Law (Draft), published on November 3, 2014, supervisors and wrongdoers would also be fined for unit bribery crimes, without any cap on the amount of the fine imposed. These new drafted provisions are consistent with the current intensive enforcement efforts combating bribe-offering, which is reaffirmed by the annual work reports of 2014 of the SPC and the SPP.
2. Typical Modes of Commercial Bribery Crimes
From 2004 through 2014, since the Combating Commercial Bribery Policy was promulgated, China’s government has attached increasing importance to combating commercial bribery crimes. During this time, several important judicial interpretations came into force and several rounds of special missions on industries of health care, real estate, insurance, telecommunications, banking, etc., were undertaken. Both the SPC and the SPP deemed the 2014 crackdown on commercial bribery as a major achievement in their annual work reports of 2014. And the SPC plans to intensify its work of combating commercial bribery in the areas of the administration of food and drugs, environmental compliance, safety production, and land-transferring.
With the trend of combating commercial bribery, several typical modes of commercial bribery and means of bribe-offering have been identified in judicial practice. These typical modes are introduced and discussed below.
a. Typical Modes Prescribed by Judicial Interpretation
In terms of areas where the risk of bribery is high, the SPC and the SPP, in the Commercial Bribery Opinions, illustrate several issues regarding the identification of bribery crimes in the health care industry, education industry, and bidding and procurement. The main issue addressed by the SPC and the SPP is how to differentiate bribery crimes involving non-state staff from those involving state staff. Such differentiation is important in judicial practice because the criminal penalty of the former is more severe than the latter, as discussed above.
i. Health Care Industry
During the purchase of medical products, including medicines, medical equipment and medical sanitary materials, it is a crime for a state official in a medical institution to take advantage of his authority or to extort or illegally accept any property from the seller in return for benefits. “State staff in medical institutions” refers to those who are in charge of public affairs in medical institutions, such as a hospital president, members of a pharmacy committee, a principal of a finance department, or a principal of a pharmacy department. Correspondingly, such seller shall be punished for offering bribes to state staff in order to obtain illegitimate benefits.
To the contrary, if illegally accepting, in any name, any property of the seller of medical products, such as medicines, medical equipment or medical sanitary materials, by taking advantage of their authority of making prescriptions, medical staff of medical institutions shall be held guilty of bribe-accepting by non-state staff.[18] In judicial practice, “medical staff” typically refers to those who have qualifications or actual authority to make prescriptions, which includes physicians, pharmacists, anti-epidemic personnel, paramedics and other medical technicians. But any person who has the power to advise or recommend suppliers of medical products to medical institutions, or has a significant influence on such matters, will be deemed as state staff as he thereby substantially undertakes official business.
As an example of an enforcement action in this industry, in People v. Luoyang Weijian Pharmaceutical Co., the District Court of Chanhe found that the Weijian unit bribed the president of a local hospital, a principal of the pharmacy department of the hospital, and a principal of the equipment department of the hospital, and thus held the Weijian unit guilty of bribe-offering to state staff.
ii. Education
Bribery crimes in the education industry frequently happen during the procurement of teaching materials, teaching aids, school uniforms, or other supplies. Any state official involved in such a process shall be subject to criminal liability for extorting or illegally accepting any property from the seller by taking advantage of his authority.[19] State officials in this context are those who are in charge of procurement for an educational institution or who have great influence on matters of procurement in public schools, which includes the presidents of schools and other principals of school departments. Persons in private schools are deemed as non-state staff even when in charge of procurement, except for those persons who were assigned to private schools by state organs or public institutions. Normal teachers are deemed as non-state staff in both public and private schools. Where any teacher illegally accepts, in any name, any property of a seller of teaching materials, teaching aids, school uniforms or other items, by taking advantage of his position of teaching, he shall be convicted of bribe-accepting by non-state staff. For instance, where, by using his influence on his students, a teacher promotes some learning materials or learning aids on behalf of a certain producer who had bribed him, such teacher may be held guilty of bribe-accepting by non-state staff.
(to be continued)
[1]Section 7 of Opinions on Issues concerning the Application of Law in the Handling of Criminal Cases of Commercial Bribery (Commercial Bribery Opinions).
[2]Section 8 of the Commercial Bribery Opinions.
[3]See Opinions on Issues concerning the Application of Law in the Handling of Criminal Cases Involving the Acceptance of Bribes (Bribe-accepting Opinions), promulgated by the SPC and the SPP on July 8, 2007, No. 22 [2007] of the SPC.
[4]The SPC Guiding Case No. 3 (2009) Su Xing Erzhongzi No.0028 [(2009)苏刑二终字第0028号], awarded on November 30, 2009.
[5]The Central Leading Group for Combating Commercial Bribery was jointly founded by the Commission for Discipline Inspection of the CPC, the Legislative Affairs Commission of the National People’s Congress, the SPC, the SPP and most of the ministries and commissions of the State Council in 2006. Regulations and guidelines promulgated by it usually are applicable to jurisdictions of the aforesaid public institutions.
[6]Zhong Zhi Hui Fa (2007) No.4 (中治贿发[2007]4号), promulgated on May 28, 2007.
[7]See Article 30 of the Criminal Law.
[8]XIAO, Zhonghua. (2013). Discussion on Identification of Crime of Bribe-Accepting by a Unit and Crime of Bribe-Offering by a Unit. Research on Rule of Law 5, 10.
[9]Id.
[10]Section 18 of Opinions on Some Issues concerning the Application of Law for Handling Cases of the Crime of Smuggling, promulgated by the SPC, the SPP and the General Administration of Customs on July 8, 2002, Fa (2002) No.139 [法(2002)139号].
[11]LI, Hong (2001), Unit’s Criminal Liability (pp. 224, 290), Tsinghua University Press.
12 Hui Zhongfa Xinger Chuzi No.2 [(2014)穗中法刑二初字第2号], awarded on February 26, 2014.
13 Wen Lu Xing Chuzi No.1005. [(2013)温鹿刑初字第1005号], awarded on August 23, 2013.
[14]See Article 31 of the Criminal Law.
[15]See Article 393 of the Criminal Law.
16 Tie Xingyi Chuzi No.00001 [(2011)铁刑一初字第00001号], awarded by the Intermediate Court of Tieling on February 13, 2012.
[17]See Section 2.1 of the Minutes of the Symposium on Trial of Financial Crime Cases by Courts Nationwide, Fa (2001) No.8, promulgated by the SPC on January 21, 2001.
[18]Section 4 of the Commercial Bribery Opinions.
[19]Section 5 of the Commercial Bribery Opinions.