Does China need an anti-foreign bribery statute? Some lessons from the FCPA of US

• Author: JIANG Dong
• Pages: 355-371

FRONTIERS OF LAW IN CHINA

VOL. 12 SEPTEMBER 2017 NO. 3

DOI 10.3868/s050-006-017-0020-9

FOCUS

ANTI-CORRUPTION: AN INTERNATIONAL AFFAIR WITH DOMESTIC EFFORTS

DOES CHINA NEED AN ANTI-FOREIGN BRIBERY STATUTE? SOME LESSONS FROM

THE FCPA OF US

JIANG Dong∗

Abstract Globalization has been accompanied by the spreading of bribing foreign

officials. In order to curb the transnational corruption, the US has pioneered the

anti-foreign bribery through enacting the 1977 Foreign Corrupt Practice Act (FCPA),

which also stimulated the formulation of international anti-corruption agreements. Even

though the 8th Amendment of China’s Criminal Law contains a concise provision on

sanctioning bribing foreign officials, however, China still does not have a

comprehensive anti-foreign bribery legal mechanism. As the second largest economy of

the world, China seems inevitably to have its own anti-foreign corruption statute. This

article aims to use the U.S. FCPA as an analytical subject to discuss whether or not

China has the necessity of enacting its own statute of foreign corruption preven tion. The

issues such as extraterritorial jurisdiction and compliance burden should also be

considered in the enactment of China’s possible anti-foreign bribery law.

Keywords anti-foreign corruption in China, FCPA, extraterritorial jurisdiction, compliance

burden

INTRODUCTION .................................................................................................................... 356

I. THE TIMING FOR CHINA TO MAKE ITS OWN ANTI-FOREIGN BRIBERY STATUTE: A

HISTORIC COMPARSION WITH THE US FCPA ......................................................... 357

A. A Review of the Legislative Background of FCPA............................................. 357

B. The Contemporary Situation China Faces on Anti-Foreign Bribery ................ 360

II. THE CONTEMPORARY CHINESE ANTI-CORRUPTION LAW S: WHETHER THEY ARE

SUFFICIENT TO CURB FOREIGN BRIBERY?.............................................................. 361

A. An Overview of China’s Criminal Sanction on Corruption............................... 361

B. The Declarative Effect of China’s Criminal Law Amendment on Anti-Foreign

Bribery .............................................................................................................. 364

∗ (姜栋) Ph.D. in Legal History, School of Law, Renmin University of China, Beijing, China; Associate

Professor in Legal History, School of Law, Renmin University of China, Beijing 100872, China. Contact:

djiang@ruc.edu.cn

356 FRONTIERS OF LAW IN CHINA [Vol. 12: 355

III. SOME CHALLENGES CHINA WILL FACE FOR ENACTING THE ANTI-FOREIGN

BRIBERY LAW....................................................................................................... 366

A. Extraterritorial Jurisdiction ............................................................................ 366

B. The Compliance Burden ..................................................................................369

CONCLUSION........................................................................................................................ 371

INTRODUCTION

Corruption is evil. As stated by former secretary-general of the United Nations Kofi

Annan in the Forward to the United Nations Convention against Corruption (UNCAC):

Corruption is an insidious plague that has a wide range of corrosive effects on

societies. It undermines democracy and the rule of law, leads to violations of human rights,

distorts markets, erodes the quality of life and allows organized crime, terrorism and other

threats to human security to flourish. This evil phenomenon is found in all countries — big

and small, rich and poor — but it is in the developing world that its effects are most

destructive.

Corruption is transnational. Dating back to 1977, the Committee on Interstate and

Foreign Commerce of US House of Representatives depicted how cross-border bribery is

prevailing in American business:

More than 400 corporations have admitted making questionable or illegal payments.

The companies, most of them voluntarily, have reported paying out well in excess of $ 300

million in corporate funds to foreign government officials, politicians, and political parties.

These corporations have included some of the largest and most widely held public

companies in the United States; over 117 of them rank in the top Fortune 500 industries.

The abuses disclosed run the gamut from bribery of high foreign officials in order to secure

some type of favorable action by a foreign government to so-called facilitating payments

that allegedly were made to ensure that government functionaries discharge certain

ministrial [sic] or clerical duties. Sectors of industry typically involved are: drugs and

health care; oil and gas production and services; food products; aerospace, airlines and

air services; and chemicals. The payment of bribes...is counter to the moral expectations

and values of the American public. But not only is it unethical, it is bad business as well. It

erodes public confidence in the integrity of the free market system. It short-circuits the

marketplace by directing business to those companies too inefficient to compete in terms of

price, quality or service, or too lazy to engage in honest salesmanship, or too intent upon

unloading marginal products...Bribery of foreign officials by some American companies

casts a shadow on all U.S. companies. The exposure of such activity can damage a

company’s image, lead to costly lawsuits, cause the cancellation of contracts, and result in

the appropriation of valuable assets overseas.1

Undoubtedly, corruption is illegal universally. Every jurisdiction tries to crack down

1 Report of Unlawful Corporate Payments Act of 1977, House of Representatives, 95th Congress, 1st

Session, Report No. 95–640.