1. New law or regulation

State level: No developments

On September 23, 2013, the Ministry of Finance, the National Government Affairs Administration, and the Administration of Government Affairs, directly under the Central Committee of the Communist Party of China (“CPC”), jointly issued the Administrative Measures on Conferences of Central and State Departments (“Measures”), which target cutting expenditure on official meetings by central government departments. Such meeting expenditures, which include food and accommodation fees for attendees, are reported to have increased year-by-year due to oversized or unapproved meetings held by certain government departments. These are considered to have led to the serious waste of public funds and created more opportunities for corruption. The Measures specify the standard costs that should be applicable to four categories of meetings at different levels and of different sizes.

Local level (Beijing & Shanghai): No developments

Communist Party Rules: No developments

2. Upcoming law or regulation

No developments

3. Government Action

(1) On September 5, 2013, Yang Dacai (“Yang”), the former Head of Work Safety Administration of Shanxi Province, was sentenced by the Intermediate People’s Court of Xi’an City, Shanxi Province, to 14 years in prison for taking bribes and holding a huge amount of property from unidentified sources.

Yang was found guilty of taking bribes totaling RMB 250,000 (USD 40,839) to help a company obtain its work safety qualification. In addition, Yang was unable to explain the source of personal assets amounting to RMB 5.04 million (USD 823,329). Yang became well known to the public after he was pictured smiling at the scene of a traffic accident on August 26, 2012, which left 36 people dead. Later, he was found in different online pictures wearing various luxury watches, and became known online as “Brother Watch” by Internet users. This may have contributed to drawing the attention of the authorities to him.

(2) On September 11, 2013, Zhang Shengtao (“Zhang”), the former Deputy Mayor of Anyang City, Henan Province, was sentenced to 15 years in prison by the Intermediate People’s Court of Zhumadian City, Henan Province.

During his term as Deputy Mayor from April 1994 to September 2011, Zhang allegedly accepted cash bribes from 14 individuals from different enterprises, totaling RMB 8.25 million (USD 1.34 million) and USD 10,000, plus shopping cards worth RMB 120,000 (USD 19,603) and a garage worth over RMB 100,000 (USD 16,335). In exchange, Zhang provided illegal benefits to the bribe-givers in the form of various construction projects, land utilization opportunities, and company financing. Zhang also was found to have accepted bribes from 137 subordinates amounting to RMB 6.28 million (USD 1.02 million) and USD 1,000, plus shopping cards worth RMB 32,000. Zhang was given a lighter sentence then might otherwise have been the case because he confessed to his crimes.

(3) On September 12, 2013, Cai Bin (“Cai”), the former Political Commissar of Panyu district branch of Guangzhou Urban Administrative Committee, was sentenced by the People’s Court of Haizhu District, Guangzhou City, Guangdong Province to 11.5 years in prison for accepting bribes.

Cai was found to have outsourced work from Pan’an Industrial Automobile Maintenance Factory, an affiliated enterprise of the government, to two individuals in exchange for bribes from the two individuals amounting to RMB 2.75 million (USD 449,237). The Party Commission for Discipline Inspection, as well as the relevant departments in Panyu district commenced their investigations of Cai as the result of an online report last year claiming that Cai owned 22 parcels of real estate, an allegation that earned him the nickname “Uncle House”.

(4) On September 22, 2013, Bo Xilai (“Bo”), a former member of the CPC Central Committee Political Bureau and the former Municipality Party Secretary of Chongqing Municipality, was sentenced to life imprisonment by the Intermediate People’s Court of Jinan City, Shandong Province for accepting bribes, embezzlement, and abuse of power. Bo was also deprived of political rights for life, and all of his personal assets were confiscated.

During his term as Mayor and Municipality Party Secretary of Dalian City, the Governor of Liaoning Province and the Minister of Commerce, Bo, together with his wife and son, allegedly accepted from Tang Xiaolin, the general manager of Dalian International Development Co., Ltd. and Xu Ming, the chairman of Dalian Shide Group Co., Ltd., bribes in an amount exceeding RMB 20.44 million (USD 3.33 million). In return, Bo took advantage of his position to seek benefits for and protected the interests of the two companies in construction projects. Bo was further found to have embezzled a project fund totaling RMB 5 million (USD 816,795). He was also charged with abuse of power in the murder of British businessman Neil Heywood by his wife, Bo Gu Kailai.

(5) On September 30, 2013, Yang Hanzhong (“Yang”), the former Deputy Secretary of Political Science and Law Enforcement Committee of Inner Mongolia Autonomous Region, was sentenced to death with two years’ reprieve by the Intermediate People’s Court of Baotou City for taking bribes and abuse of powers.

Reportedly, Yang was charged with taking advantage of his positions during his term in office from 2000 to 2012, and accepting and extorting bribes amounting to RMB 40.37 million (USD 6.59 million), USD 350,000, and AUD 40,000 (USD 37,724). He was charged with these acts on nearly 70 occasions, all performed in exchange for interests granted to others in real estate development, construction projects, and job promotions.

4. Other

(1) It was reported on September 28, 2013, that all the ten inspection teams of the Central Commission for Discipline Inspection (“CCDI”) have completed their investigations. Starting from the end of May 2013, ten inspection teams were conducting inspections in the provinces of Inner Mongolia, Jiangxi, Hubei, Chongqing, and Guizhou, as well as the Ministry of Water Resources, the Export and Import Bank of China, the China Grain Reserves Corporation, the Renmin University of China, and the China Publishing Group. Their investigations focused several areas, including corruption, work style, “bureaucratism”, “hedonism”, and other disciplinary issues. All of the teams found problems in the area of job promotions during their investigations; nine teams found corruption and bribery problems as well.

(2) On 2 September 2013, CCDI and the Ministry of Supervision jointly launched an official website (http://www.ccdi.gov.cn/), in order to improve the public supervision of anti-corruption campaigns. The website will reportedly timely publish cases that are under investigation by disciplinary authorities and the results of such investigations. It was reported that since the official launch of the website, more than 15,253 cases of disciplinary violations have been reported, averaging 760 cases per day.

(3) China’s anti-bribery investigation into the pharmaceutical industry, which began with investigations into the British drug company GlaxoSmithKline, is ongoing. Authorities have been probing numerous international and Chinese drug companies with regard to corruption and pricing issues. On 13 September 2013, Bayer, a leading German pharmaceutical company, admitted that it had been visited by the State Administration of Industry and Commerce. Bayer reported that it was cooperating with the authorities with regard to an investigation. On 17 September 2013, the pharmaceutical company, Novartis said that it would conduct an investigation into whether Alcon, its ophthalmic production department, had bribed doctors in China. The Chinese domestic insulin manufacturer Gan & Lee, likewise said on 11 September 2013 that it was investigating allegations published by a magazine regarding its bribery of doctors over the past five years.

(4) Dumex is currently confronting allegations that it has bribed doctors and nurses in exchange for being selected to provide the “first taste of milk” to newborn babies. It was reported by China Central Television that in April, Dumex paid RMB 500,000 (USD 81,679) to doctors and nurses in seven provinces, including Beijing, Liaoning, Jilin, Hebei, Tianjin, Inner Mongolia, and Heilongjiang. Dumex has launched an investigation into the alleged bribery. The Dumex brand is owned by Danone Group, a pioneer in producing infant formula milk powder, which has more than 100 years’ experience in the industry and business in 120 countries around the world.

5. China-related FCPA Action