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Doing Business in China: Don’t Bribe Anyone, Even Indirectly
Because this blog is more than ten years old, there is hardly a China business or law situation of which we have not written at least once. Last week, one of our China lawyers got an email from a company wanting to hire us because they needed help finding someone to bribe someone in China because “it would be too risky for us to do it ourselves.”
It reminded me of a previous email (which had not been to me, but which I thought I remembered from a blog post, and I was right. That post was from April, 2014, and it was entitled, Dude, Didn’t Your Mamma Tell You Not To Engage in China Bribery Through Intermediaries? Rather than craft a new blog post, I will simply borrow from the old one, because nothing has changed. Or one might say that a lot has changed because China itself has massively stepped up its own anti-corruption enforcement.
That post involved a similar email:
After repeated attempts by our ________ [in China] to retrieve the goods/money by bribes and threats without success, we must now look at other options.
A younger me was incensed:
Are you kidding me? Are you friggin kidding me?
I immediately wrote back to say that my firm had no interest in working on the case because it did not make economic sense to hire us to pursue the amount at issue and also to sternly warn him (it was a male) that using an agent to pay a bribe is blatantly illegal. I also strongly suggested that he contact an attorney in his home country to figure out his best course of action for dealing with what he had already done in terms by using an intermediary to pay a bribe.
I then explained the issues in paying bribes, even through intermediaries:
Using intermediaries to pay bribes is illegal under every country’s anti-corruption act of which I am aware and it is certainly illegal in the 40 countries that have ratified the OECD Anti-Bribery Convention and under China’s anti-corruption laws. To oversimplify, you are bound by the anti-bribery laws of all of the countries in which you conduct business.
In bribery law terms, an “intermediary” can be roughly defined as any third party who assists in some aspect of your foreign business. This can (and usually does) include your sales agent, your joint venture partner, your distributer or reseller and even sometimes your OEM manufacturer.
Using intermediaries overseas does not protect you from the risk of going to jail for corruption, it INCREASES that risk. Most corruption cases involve conduct by third parties.
You should be conducting reasonable due diligence on those with whom you conduct your business to determine that they are not involved in corruption. You also should be making clear to the third parties with whom you deal (both in writing and otherwise) that you will brook no corruption on their part — especially on your behalf. And you should record all of this so that if you are ever investigated, you have something to show the government (whatever government that may be) all that you did.
‘Nough said.
The post Doing Business in China: Don’t Bribe Anyone, Even Indirectly appeared first on China Law Blog.
We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.
Source: http://www.chinalawblog.com/2016/04/doing-business-in-china-dont-bribe-anyone-even-indirectly.html
