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How to Distinguish Between Individual and Corporate Bribery

2018-11-29 15:26 Thursday


China has been cracking down on commercial bribery, with enforcement actions on the rise. Different methods of bribery bring different consequences on the company involved. It is therefore important to make a distinction between individual bribery and corporate bribery.

商业贿赂

According to Chinese law, there are two standards for distinguishing between individual bribery and corporate bribery:

1. Is the bribery the company's will?

2. Does the illegal income belong to the company?

6 Major Criteria for "Company Will" :

The external performance of employee and company bribery is consistent;

Decision-making process: bribery is made according to a procedure;

Company system: written documents and internal regulations clearly stipulate the sales discounts;

Company makes a declaration of intent: the contract signed by the company contains unfair competition clauses;

Defects in the company's authorization: the bribery decision is made by the responsible person in charge within his or her scope of authorization;

The company provides financial support: funds used for bribery are paid out by the company.

How to Judge what Constitutes "Unfair Interest Attribution"

A common scenario is that the company obtains operating revenue from bribery, and the employee  obtains illegal gains through salary, bonuses, or commissions. However, when the employee's illegal income is derived from the company's illegal revenue, the illegal income cannot be identified as belonging to the individual.

When judging the "ownership of illegitimate interests", one should pay attention to quantitative analysis. After all, bribery can lead to extra benefits for employees, but companies can also reap big benefits from increased sales. If most of the profits belong to the company, the company should be regarded as offering bribes.

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