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The Development of Anti-corruption Enforcement in China

2019-01-23 10:09 Wednesday

As more companies look to expand their presence in the Chinese market, they face an inevitable challenge——corruption. Compliance-related risk should be a top priority for corporate officers, as China's anti-corruption campaign has reached a new crescendo in recent years.

Anti-corruption Enforcement

In China, ongoing trade wars and political reforms have created market uncertainty, accompanied by an increased risk of commercial bribery. In addition, China's economic growth is expected to slow to 6.3% in 2019. Such market pressure often drives companies and sales teams to achieve sales targets through improper activities, said Kelly Austin, a partner at law firm Gibson Dunn.

The government's anti-corruption campaign is expected to persist under the powerful National Supervisory Commission (NSC), which was established in March 2018, effectively consolidating and expanding the enforcement power of China's anti-corruption agencies. China's anti-corruption authorities also include the Central Commission for Discipline Inspection and the National Security Commission which covers only party members, whereas the National Security Commission covers "all public officials, regardless of government departments or party members", including senior executives of state-owned enterprises.

"Even though China's National Supervisory Commission mainly supervise government officials, we are seeing more and more companies being investigated for bribery," Austin said. As a result, she believes companies dealing with anti-corruption enforcement in China need experienced lawyers - local Chinese lawyers and international legal advisers - who really understand how these anti-corruption enforcement agencies interact.

Ms. Austin also believes that foreign compliance and legal professionals should pay attention to recent enforcement actions in China, as these activities may lead to new enforcement actions in the United States.

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