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Bribery in Today's China

By Rupert Utley
September 29, 2010

Since the late 1990s, companies conducting business in China have experienced a surge in enforcement of anti bribery legislation, ranging from significant enforcement of Chinese domestic laws to FCPA for U.S. companies. As an example of the enforcement activity by the Chinese government, the country's Central Discipline and Inspection Committee takes action against approximately 180,000 officials annually, with an estimated 15%-20% of them for corrupt activities. This past April, the UK passed the Bribery Act, which imposes severe penalties on British violators for any bribery, not just those of government officials, in China and worldwide. In-house counsel for corporations conducting business in the world's fastest-growing market should take heed of these legislative and enforcement shifts, as well as the slowly evolving cultural mores in the new China.

Today's China is experiencing what I call a “corruption dichotomy.” There's a Chinese proverb that illustrates the historical blind eye to corruption: “The mountains are high; the emperor is far away.” That notion was recently quantified by Dr. Pei Minxin of Carnegie Endowment for International Peace, who estimated that corruption in China amounts to about 3% of GDP and that the chances of getting caught, convicted and being jailed for bribery is also about 3%. But concurrently, China has enforced some of the world's most stringent penalties for those found guilty of corruption. Cheng Kejie, former vice-chairman of the Standing Committee of the National People's Congress, was tried and executed for accepting bribes. The mountains still may be high, but the long arm of Chinese officials is growing longer.

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