On February 25, 2011, China adopted Amendment No. 8 of the PRC Criminal Law, which criminalizes bribery of foreign government officials and of international public organizations in order to secure illegitimate business benefits. Previously, the focus of PRC antibribery laws and regulations had been on bribery – both involving officials and purely commercial parties — in a domestic context.

Not surprisingly, there’s been speculation in the US media that these amendments mark the adoption of China’s version of the FCPA or that China will emulate the activist enforcement stance taken by the US DOJ and SEC in recent years.

At present, all that really is simply speculation however. There’s much we don’t yet know about Amendment No. 8:

  • how are ‘foreign officials and international public organizations’ defined?
  • will offers of money and property encompass hospitality and if so, in what respects?
  • the crime of official bribery had previously focused on ‘illegitimate benefits’ – is there significance to the addition of the term ‘business’: “illegitimate business benefits”?
  • will there be an uptick in enforcement actions involving Chinese companies operating abroad (such as in the Middle East and Africa)?
  • and perhaps most critically from the perspective of foreign investors, what is their exposure?

Applying  jurisdictional standards generally followed in the PRC, PRC legal persons can expect to be subject to jurisdiction. Thus, foreign-invested PRC companies would presumably be covered.  An area of potential exposure for foreign companies is whether through use of branches of the parent company (such as a representative office), the parent could be subject to PRC jurisdiction in a case involving bribery of a non-PRC official. I would expect that the answer is yes if the conduct involved personnel working for the China branch.

More attenuated would be whether the actions of an employee of the parent company with  a China branch, but who did not work in China for the branch, could expose the parent to the jurisdiction of the PRC courts. That would seem expansive. But, if you asked the folks at Statoil or Siemens, no such concerns inhibited the US regulators’ actions in those cases.

China often uses promulation of administrative notices or judicial interpretations as a means of putting meat on the statutory bones. We will await with interest to see whether the Supreme People’s Court will release an interpretation on the implications of Amendment No. 8 of the Criminal Law.