02 May 2011

China SignPost™ (洞察中国) #34: A Foreign Corrupt Practices Act with Chinese Characteristics: Step 1”

Gabriel B. Collins and Andrew S. Erickson, “A Foreign Corrupt Practices Act with Chinese Characteristics: Step 1,” China SignPost™ (洞察中国) 34 (1 May 2011).

China SignPost™ 洞察中国–“Clear, high-impact China analysis.”©

  • In late February 2011, the National People’s Congress ratified an amendment to China’s Criminal Law that makes it illegal for PRC nationals and companies to bribe foreign government officials or officials of non-governmental organizations.
  • The amendment, which became effective on 1 May 2011, is the first step in a long and complex process, but nonetheless sets a welcome precedent by implicitly recognizing that bribery abroad is destructive to Chinese interests.
  • The rapid penetration of smartphones and other forms of Internet connectivity in the developing world provide opportunities for common citizens to help enforce the laws by independently reporting graft involving Chinese business activities in their country.
  • The efforts of the Janaagraha Centre for Citizenship and Democracy and its new IPaidABribe.com bribe reporting website offer a shining example of how technology can be harnessed to improve transparency and fight graft.
  • IPaidABribe.com, which went live in fall 2010, has so far garnered more than 436,000 hits and over 8,400 reports discussing bribes paid.

Thus far, China’s lack of anti-bribery mechanisms that apply to companies operating abroad like the U.S. Foreign Corrupt Practices Act (FCPA) has been a major competitive advantage for Chinese businessmen competing overseas against foreign firms, which must often adhere to strict laws at home forbidding graft in corporate activities abroad.  Yet a recent development suggests Beijing is increasing its commitment to reduce bribery by Chinese firms and individuals doing business overseas. … … …