Why Compliance with the US Foreign Corrupt Practices Act Matters in China
How is it that US law can apply to certain Chinese companies and the conduct of Chinese business executives? The answer is the Foreign Corrupt Practices Act (FCPA), a broad-reaching US law enacted to prohibit bribery as a means of obtaining and retaining business. A common misperception in the business community is that the FCPA applies only to US companies and US citizens. However, under certain circumstances, the FCPA can also apply to the conduct of Chinese companies and Chinese business executives, making FCPA compliance crucial.
Date:
February 2008
Promulgated: 10 February 2008
Keywords (click to search): [US liability] [corruption] [bribery] [prosecution]
By Mike Koehler*
By all accounts, the Chinese government is increasing enforcement of its domestic corruption and bribery laws and Chinese business executives are no doubt well aware of the severe penalties and fines for engaging in bribery in China.1 However, it may not be well understood that, under certain circumstances, Chinese companies and Chinese business executives engaging in bribery in China may also be subject to prosecution by the US government.2
This article does not aim to show how the actions of Chinese nationals employed by US companies in China can expose their US employer to FCPA liability even though there have been several examples in recent years of this occurring. For instance, in December 2007, Lucent Technologies Inc. settled an FCPA enforcement action by agreeing to pay $2.5 million in combined fines and penalties based principally on the conduct of employees of its subsidiary in China.3
To continue reading this article, you must be a subscriber.
The rest of this article is available to subscribers only. Subscribe now to continue reading this article and to have full access to all other articles and full-text translations.