China get serious in its fight against bribery and corruption – New Judicial Interpretation issued

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4 years on and there is still no sign of China’s anti-corruption campaign slowing.

In a further display of China’s commitment to the campaign, the Supreme People’s Court and the Supreme People’s Procuratorate jointly issued an interpretation on Several Issues concerning the Application of Law in the Handling of Criminal Cases relating to Graft and Bribery (the “Interpretation”) on 18 April 2016. The Interpretation supplements Amendment IX to the Criminal Law of the PRC (“Ninth Amendment”), which came into force on 1 November 2015.

The Ninth Amendment itself introduced an arsenal of weaponry to tackle bribery and corruption. Stricter punishment was introduced for both individual and corporate offences. However, grey areas remained over sentencing thresholds and standards which we defined by reference to open-ended criteria like ‘huge amount’ or ‘especially huge’ amount. The Interpretation seeks to clarify sentencing standards for both official bribery and commercial bribery sentences. Further, in response to the more current methods of paying a bribe, the definition of property has also been expanded to capture intangible property, to clarify the meaning of ‘seeking  benefits for others’, and bribery to or through close relatives and others whom state servants have close relationships/mutual interests with.

Since there are no signs of the Chinese government letting up on their efforts to combat bribery and corruption, individuals and companies working in the PRC or with PRC companies are well advised to keep track of the developments in this space. We summarise below the key developments introduced by the Ninth Amendment.

Subject matter of bribery offences

The definition of “property” which was limited to money and tangible property has been expanded to intangible benefits and  property benefits; property benefits includes material benefits that can be converted to money (such as house decoration and exemption of debt) as well as other benefits requiring payment of money in exhange (such as membership fees and paid travel).

“Seeking benefits for others” – key element in crimes of accepting bribery

Examples are given as to what would be considered as “seeking benefits for others” in bribery offences:-

  1. Actually seeking s benefits for others, or promising to seek benefits for others; or
  2. Knowing that the bribe giver has specific business in connection with the recipient’s duty or area of function; or
  3. Accepting money or property after the recipient’s performance of hire/ her duty, as a reward for such performance.

In addition, a government official who seeks or accepts property with the value of no less than RMB30,000 from his subordinate(s) or person’s within his/ her administration, which may affect his/her performance of duties, shall be deemed to have promised to seek benefits for others.

Stricter standards and harsher punishment

The highest penalty for embezzlement and bribery by state servants is death penalty; should certain commutation (mitigating) factors be present, it may be reduced to imprisonment for life, in which case, such imprisonment for life shall be unconditionally executed without any further commutation or release on  parole. The death penalty applies if:-

  1. The accepted bribe or embezzlement amount is extremely large;
  2. The situation is extremely serious;
  3. The social influence is extremely negative; and
  4. It was caused extremely large losses to the state and people’s interest.

The new standards and criteria for sentencing applicable to individual bribe givers and recipients are set out below. Entities remain subject to the threshold and standards under the Criminal Law.

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Conclusion

This Interpretation is a further demonstration of Chinese government’s commitment to fight bribery and corruption. Companies doing business in China and foreign investors should keep a close watch on the political and economic climate in China and closely monitor the development of the laws in this area to ensure that its compliance policies are kept relevant.

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