01 August 2016

Anti-bribery and corruption guide: China

"The tough sanctions imposed by PRC Criminal Law make it imperative for businesses to ensure effective procedures are in place to prevent commercial or official bribery."

Harry Liu
Partner

 

1. What is bribery?

The PRC Criminal Law distinguishes between two types of bribery: official bribery and commercial bribery.

Official Bribery

Official bribery is the criminal offence of giving, accepting, soliciting or introducing a bribe to or by state functionaries. One of the parties involved in the offence of official bribery must be a state functionary and a government related entity. There are monetary thresholds for these offences. The threshold for prosecution of the crime of giving a bribe is RMB30,000, if both the offeror and the recipient are individuals. However, in some specific situations[1], the crime of giving a bribe is committed if the value of the bribe is more than RMB10,000 and less than RMB30,000. If the offeror is an individual and the recipient is a government related entity, such as a government agency or state-owned enterprise, the threshold for prosecution is RMB100,000; if the offeror is a legal entity, the threshold for prosecution is RMB200,000 regardless of whether the recipient is an individual or not. With respect to the crime of accepting a bribe, the threshold for prosecution is RMB30,000, if the recipient is an individual and RMB100,000, if the recipient is a government related entity. Similar to the crime of offering a bribe, exceptions also exist for prosecuting the crime of accepting a bribe.[2] Furthermore, the threshold for prosecution is RMB20,000 for introducing an individual to give a bribe, while the threshold for prosecution of introducing an entity to give a bribe is RMB200,000[3].

Commercial Bribery

Commercial bribery includes giving a bribe and accepting a bribe. Here, none of the parties involved is government related. With respect to the crime of giving a bribe, the threshold for prosecution is RMB60,000, if the offeror is an individual, and RMB200,000, if the offeror is an entity. The threshold for prosecution of the crime of accepting a bribe is RMB60,000 regardless of whether the offeror is an individual or not. Accepting a bribe by a private-owned entity shall not constitute a criminal offense.

In certain defined circumstances, crimes involving amounts below the aforementioned thresholds will be investigated.

Commercial bribery is also prohibited by the PRC Anti-unfair Competition Law which defines commercial bribery as business operators using money, assets, or other means to bribe counter parties to sell or purchase goods. Commercial bribery includes kickbacks provided covertly and off the books. No monetary threshold for initiating an administrative investigation against commercial bribery is stipulated under the PRC Anti-unfair Competition Law.

According to the PRC Criminal Law, a state functionary is defined as:

  • ƒƒa person who performs public services in state organs (including executive, administrative, judicial, prosecutorial, and military organs of all levels);
  • ƒƒa person who performs public services in state-owned companies or enterprises;
  • ƒƒa person who is assigned by state organs or state-owned enterprises to enterprises or institutions that are not owned by the state but perform public services; and
  • ƒƒother people who perform public service according to law.

2. What are the exceptions/defences?

According to article 389 of the PRC Criminal Law, if the offeror gives assets to a state functionary due to the extortion conducted by the state functionary but does not receive any illegal benefit, the offeror shall not commit the crime of giving a bribe.

3. What are the sanctions?

Under the PRC Criminal Law, the sanctions for the three sub-categories of crimes of official bribery are listed as followings: 1) sanctions for accepting a bribe range from criminal detention of not more than three years imprisonment to life imprisonment or the death penalty; 2) sanctions for the crime of giving a bribe range from criminal detention of not more than five years imprisonment of not more than fifteen years imprisonment or life imprisonment; 3) sanctions for introducing a bribe range from criminal detention to not more than three years imprisonment.

The sanctions for the crime of commercial bribery are as follows: sanctions for accepting a bribe by a non-state functionary range from criminal detention of not more than five years imprisonment to a maximum of fifteen years imprisonment. Sanctions for giving a bribe to a non-state functionary range from criminal detention of not more than three years imprisonment to not more than ten years imprisonment.

With respect to the sub-categories of crimes mentioned above, the offender’s assets and illegal proceeds may also be confiscated. In addition, Amendment (IX) to the PRC Criminal Law, which took effect in November 2015, imposes a fine in respect of each of the above-mentioned crimes except for the crime of accepting a bribe by non-state functionary.

According to the PRC Anti-unfair Competition Law, administrative penalties for commercial bribery may include a fine ranging from RMB10,000 to RMB200,000, as well as disgorgement of illegal income generated from the commercial bribery.

 

[1] E.g. offering bribes to three or more people, using unlawful gains for the bribe, giving bribes to officials of certain government agencies, seeking promotion opportunities by offering bribes, bribing judicial officers and affecting the judicial justice, or causing loss in value of more than RMB500,000 and less than RMB1,000,000.

[2] E.g. having been penalized by Party’s discipline rules and administrative agencies due to graft, bribery, or embezzlement, having been penalized under Criminal Law due to intentional offence, using the illicit money and property for illegal activity, refusing to confess the use of the illicit money and property or refusing to cooperate with asset recovery efforts and causing the failure of recovery, causing damage to public property and the interests of the nation and people, seeking opportunities of promotion and position for others.

[3] The threshold for prosecuting the crime of introducing for giving a bribe has not been revised by the Bribery Interpretation.


More from the Anti-Bribery and Corruption Guide:

Australia, Belgium, France, Germany, Hong Kong, Italy, Saudi Arabia, Singapore, Spain, United Arab Emirates and United Kingdom.

A Guide to Doing Business in China

We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China

Anti-Bribery and Corruption - An International Guide

The International Anti-Bribery and Corruption Guide is also available as a PDF.

The guide covers the regimes in the following regions: Australia, Belgium, China, France, Germany, China Hong Kong SAR, Italy, Saudi Arabia, Singapore, Spain, UAE and UK.

Anti-Bribery and Corruption - An International Guide
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