1. New law or regulation

State level: No developments.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules: No developments.

2. Upcoming law or regulation

No developments.

3. Government Action

(1) It was reported on February 7, 2014 that Zhou Guangrong (“Zhou”), the former Head of Health Bureau of Chengdu City, Sichuan Province, was sentenced to 14 years and 6 months in prison by the Intermediate People’s Court of Chengdu City for taking bribes.

Zhou was found guilty of soliciting real property worth RMB 349,600 (USD 56,891) and an automobile worth RMB 95,800 (USD 15,589) from Xu Zuo, a former employee of Chengdu Liquefied Natural Gas Co., Ltd. Zhou was also charged with conspiring with Xu Zuo and He Jie (the former President of Chengdu No.9 People’s Hospital) to illegally grant a construction project to a contractor surnamed Zhu, in exchange for bribes totaling RMB 4 million (USD 650,936). Xu Zuo and He Jie were respectively sentenced to 10 years and 13.5 years in prison for participating in the bribery.

(2) On February 17, 2014, Chen Bo (“Chen”), the former General Manger and Legal Representative of Hainan Highway Co., Ltd., a state-owned enterprise, was sentenced to 15 years in jail for bribe-taking, with deprivation of political rights for 5 years and confiscation of personal assets amounting to RMB 500,000 (USD 81,367) by the No. 1 Intermediate People’s Court of Hainan Province.

During his term from 2005 to 2010, Chen reportedly accepted RMB 6.995 million (USD 1.13 million) in cash and shopping cards worth RMB 20,000 (USD 3,254) from several individuals. As return, Chen sought illegal benefits for the bribe-givers in equity transfer and project construction by taking advantage of his position. Chen was given a light sentence due to his confession.

(3) On February 18, 2014, Central Commission for Dispute Inspection of Communist Party of China announced on its official website that Ji Wenlin (“Ji”), the former Deputy Governor of the southern island Hainan Province, is under investigation for serious violation of laws, regulations and disciplines. The announcement only had one sentence and gave no details. Subsequently, on February 19, 2014, the CCDI announced on its official website that Zhu Zuoli (“Zhu”), the former Vice Chairman of the People’s Political Consultative Conference in the northwestern province of Shanxi, was also under investigation for suspected serious violations of party disciplines and laws. Reportedly, Ji and Zhu are the first two provincial and ministerial-level officers toppled in 2014.

(4) On February 24, 2014, Wu Baoliang (“Wu”), the former Party Secretary of Xiao County, Anhui Province, was sentenced to life in prison by the No. 1 Intermediate People’s Court of Hefei City, Anhui Province with confiscation of his personal property worth RMB 600,000 (USD 97,640) and deprivation of political rights for life.

Reportedly, Wu was accused of taking advantage of his position during 2003 to 2012 to offer illegal benefits to others in enterprise operation, job arrangement and position promotion. As a return, Wu accepted bribes amounting to RMB 17.9 million (USD 2.91 million), USD 42,000, shopping cards worth RMB 64,000 (USD 10,414) and a watch worth RMB 35,000 (USD 5,695).

(5) On February 28, 2014, Zhou Zhenhong (“Zhou”), the former Member Of CPC Guangdong Provincial Standing Committee and former Head of United Front Department of Guangdong Province, was sentenced to death with a two-year reprieve by the Intermediate People’s Court of Xinyang City, Henan Province with deprivation of political rights for life and confiscation of all personal assets for accepting bribes and holding a large amount of property from unidentified sources.

During his term in office from July 2002 to the Spring Festival of 2011, Zhou allegedly accepted bribes totaling RMB 24.64 million (USD 4 million) from 33 individuals. In exchange, Zhou provided illegal benefits to the bribers in job promotion, enterprise operation and official election. Zhou was also prosecuted for holding more than RMB 37 million (USD 6.02 million) from an unidentified resource. Zhou was given a light sentence for his confession of the crime and return of illegal gains.

4. Other

(1) According to the speech of Chinese Premier Li Keqiang (“Li”) in the Second Anti-corruption Session of State Council on February 11, 2014, China will continue to strictly implement anti-corruption measures, streamline administration and decentralize authority, and adopt a “zero tolerance” attitude to crackdown corruption in the year of 2014. “Whoever involving corruption should be investigated without exception”, said Li.

5. China-related FCPA Action

(1) On February 13, 2014, Avon Products Inc. (“Avon”) revealed in its quarterly financial statement that it could end up paying as much as USD 132 million to resolve the charges from U.S. Securities and Exchange Commission (“SEC”) and Department of Justice for possible violations of the Foreign Corrupt Practices Act (“FCPA”) in China.

Reportedly, Avon paid bribes to officials in China for promotion of its products and obtaining the sales license for its cosmetic products. In 2008, Avon launched an internal investigation of its China operations linked to the payment of improper promotional expenses. Avon had offered USD 12 million last year for settlement of the ongoing FCPA investigation, which, however, was rejected by SEC. By the end of last year, Avon had reportedly spent over USD 340 million for the FCPA investigation since 2008.