The Supreme People’s Court (“SPC”) and the Supreme People’s Procuratorate’s (“SPP”) have released the Interpretation of Several Issues Concerning the Application of Law in Handling Criminal Cases Related to Graft and Bribery/关于办理贪污贿赂刑事案件适用法律若干问题的解释 (“Interpretation”) which includes clarifying sentencing criteria for official (those involving government officials) and commercial bribery offences. The Interpretation, issued on 18 April 2016, supplements the Criminal Law revised in late 2015 (“Ninth Amendment”) and strengthens the continuing anti-graft campaign in China. Our alert discusses the key features of the Interpretation.
Implications for Companies
As discussed in our previous alert, the Ninth Amendment introduced stricter measures and sanctions for both individual and corporate offenders, including persons in charge of a company or directly responsible for its business activities. The Interpretation provides additional guidance as to when enforcement might take place and explicitly states that bribes can include intangible benefits of commercial value.
The Ninth Amendment introduced punishment based on criteria such as “relatively large” amount or “relatively serious” circumstances, “huge” amount or “serious” circumstances, and “especially huge” amount or “especially serious” circumstances. It was unclear how such criteria was to be applied. This has now been clarified by the Interpretation which provides detailed descriptions of the sentencing thresholds and standards for bribe givers and recipients of official (those involving government officials) and commercial bribery. Companies will find this a useful framework for implementing robust compliance policies and for demonstrating the consequences of falling foul of the Criminal Law.
However, as confirmed by recent commentary from the PRC judiciary, the Interpretation’s clarification on monetary thresholds and sentencing standards do not include circumstances where bribe givers or recipients of official bribery are entities. For such entities, the threshold and standards remain the same as provided under the Criminal Law.
Key Features of the Interpretation
1. Definition of “bribes” to include intangible benefits
In addition to payments of money and tangible property, the Interpretation expressly provides that the definition of “bribe” covers intangible benefits, including material benefits of monetary value (e.g., house decoration, exemption of debt) and other benefits for which payment is made in exchange (e.g., membership service or paid travel).
2. Clarifies the definition of “seeking illegal benefits for others”
The Interpretation enumerates circumstances considered as “seeking illegal benefits for others” in bribery cases:
a) Actually seeking or promising to seek benefits for the bribe giver;
b) Knowing that the bribe giver has specific business in connection with the bribe recipient’s duty or area of function;
c) Receiving money or property after the recipient’s performance of his or her duty as a reward for such performance.
In addition, if a government official solicits or receives money or property the cumulative value of which exceeds RMB 30,000 from his or her subordinate or a person subject to his or her administration, which may affect his or her performance of duty, this is deemed as promising to seek benefits for others.
3. Clarifies the sentencing standards for the death penalty
The death penalty applies to embezzlement or official bribery cases if:
a) The accepted bribe or embezzlement amount is extremely large;
b) The situation is extremely serious;
c) The social influence is extremely negative; and
d) It has caused extremely large losses to the state and people’s interest.
A two-year suspended death sentence may be issued if there are mitigating factors. In cases where the death penalty is deemed too severe for the crime, convicts may receive a life sentence without commutation or parole.
4. Re-establishes and clarifies monetary threshold and sentencing standards
|Punishment, Sentencing Standards & Criteria|
|A. Official Bribery – Individual Bribe Recipient|
1) Up to 3 years imprisonment and fine
between RMB 100,000 to RMB 500,000 if:
• the bribe amount is “relatively large” OR
• the situation is “relatively serious”.
i) “Relatively large” – the bribe amount is between RMB 30,000 to RMB 200,000.
ii) “Relatively serious” – the bribe amount is between RMB 10,000 and RMB 30,000 AND if any of the following situations occurs:
a) The recipient has been sanctioned under the administrative regulation or party discipline for embezzlement, bribery or misappropriation of public funds;
b) The recipient has been criminally penalized for intentional offence;
c) The recipient uses the bribes for illegal activities;
d) The recipient refuses to disclose the whereabouts of bribes or refuses
to cooperate with the confiscation of bribes which leads to the failure of confiscation;
e) The bribery act has caused serious negative impact or other serious consequences;
f) The recipient has solicited bribes on several occasions;
g) The recipient provided illegal benefits to the bribe giver causing loss to public property, state interest or the public interest;
h) The recipient facilitated the promotion or change of position of the bribe giver.
2) Between 3 to 10 years imprisonment and fine from RMB 200,000 to two times the amount of the bribery or confiscation of personal property if:
• the amount of the bribe is “large”
• the situation is “serious”.
i) “Large” – the bribe amount is between RMB 200,000 to RMB 3 million.
ii) “Serious” – the bribe amount is between RMB 100,000 to RMB 200,000 AND if any of the situations from (a) to (h) as described under the “Relatively serious” situation (see section 1) ii) above) occurs.
3) Up to 10 years imprisonment, life imprisonment or death penalty,
AND fine (from RMB 500,000 to two times the amount of the bribery) or confiscation of personal property if:
• the amount of the bribe is “extremely large” OR
• the situation is “extremely serious”.
i) “Extremely large” – the bribe amount is RMB 3 million or greater.
ii) “Extremely serious” – the bribe amount is between RMB 1.5 million and RMB 3 million AND any of the situations from (a) to (h) as described under the “Relatively serious” situation (see section 1) ii) above) occurs.
|B. Official Bribery – Individual Bribe Giver|
4) 3 years imprisonment and fine if:
• the bribe amount is RMB 30,000 or more OR
• the bribe amount is between RMB 10,000 and less than RMB 30,000
AND any of the situations from a) to f) occurs.
i) The giver offers bribes to more than 3 officials;
ii) The giver uses illegal gains to give bribes;
iii) The giver seeks promotion and change of position by offering bribes;
iv) The giver offers bribes to officials who are responsible for supervision and management over food, medicine, safe production, environment protection, etc. and who carry out illegal activities;
v) The giver offers bribes to judicial officers which affects justice in judicial activities;
vi) The bribery act has caused loss of more than RMB 500,000 and less than RMB 1 million.
5) Up to 5 years imprisonment and fine if:
• the situation is “serious” OR
• “causes great loss to the state interest”.
i) “Serious” – the bribe amount is between RMB 1 million and less than RMB 5 million OR an amount between RMB 500,000 and less than RMB 1 million and any of the situations (a) to (e) as described in the above section B.4) occurs.
ii) “Causes great loss to the state interest” – the loss is between RMB 1 million and less than RMB 5 million.
6) Up to 10 years imprisonment and fine or confiscation of personal properties if:
• the situation is “extremely serious” OR
• “causes extremely great loss to the country’s interest”.
i) “Extremely serious” – the bribe amount is RMB 5 million or more, OR the bribe amount is between RMB 2.5 million and less than RMB 5 million, and any of the situations (a) to (e) as described in the above section B.4) occurs.
ii) “Causes extremely great loss to the country’s interest” – the amount of loss is RMB 5 million or more.
|C. Commercial Bribery – Bribe Recipient|
7) Up to 5 years imprisonment if the amount of the bribe is “relatively large”.
|“Relatively large” – the bribe amount is RMB 60,000 or more.|
8) More than 5 years imprisonment and confiscation of personal properties if the amount of the bribe is “large”.
|“Large” – the bribe amount is RMB 400,000 or more.|
|D. Commercial Bribery – Bribe Giver|
9) Up to 3 years imprisonment and fine if the bribe amount is “relatively large”.
|“Relatively large” – the bribe amount is RMB 60,000 or more.|
10) Between 3 to 10 years imprisonment and fine if the bribe amount is “large”.
|“Large” – the bribe amount is RMB 2 million or more.|
Actions to Consider
The Interpretation provides useful practical guidance as to when and how the bribery provisions of the Criminal Law can be triggered and enforced. Multinational companies (“MNCs”) doing business in China need to continue to be alert to the current enforcement climate and should monitor the developments in the anti-corruption landscape.
As advised in our previous alerts, an effective compliance program and a sound compliance culture are key to preventing corporate officers, employees, and third-party agents from engaging in illegal practices such as bribery, collusion and fraud. Also, regular and timely compliance training and a constant review of existing policies in response to the release of new laws and regulations, can help maintain the effectiveness of the compliance program.
The PRC government’s active promulgation of new laws and judicial guidance, including ongoing reform efforts, demonstrate China’s continued commitment towards the government’s anti-corruption campaign. In the last 12 months, we have seen, among other things, the release of the Ninth Amendment, new rules on whistleblowing, proposed amendments to the Anti-Unfair Competition Law, a new blacklist system by the State Administration for Industry and Commerce and new donation rules for the healthcare sector. Companies in China, including MNCs, should ensure that they are ready to meet the increasing compliance risks brought by these changes.