In 2021, the Chinese anti-corruption enforcement agencies issued regulations targeting bribe-givers. These regulations imposed penalties on bribe-givers that restrict their market access in China. Companies and individuals under investigation for corruption-related conduct can be placed under third-party monitorship. The Chinese anti-corruption enforcement agencies have indicated that they will focus on companies and individuals in key industries, such as life sciences, finance, education, and environmental protection.
A ‘blacklist’ system restricting bribe-givers’ market access in China
In late 2021, the Chinese enforcement agencies issued regulations implementing a blacklist system for companies and individuals that were found to have engaged in corruption-related conduct. Chinese state-owned enterprises have similarly implemented a blacklist system for suppliers that engaged in corruption-related conduct. Companies and individuals that are placed on the blacklist can be subject to a number of market access restrictions in China, as well as confiscation of illicit gains.
In September 2021, China’s Central Commission for Discipline Inspection (the CCDI), the Supreme People’s Court, and the Supreme People’s Procuratorate (the SPP) jointly issued the ‘Opinions on Further Promoting the Joint Investigation of Bribery and Acceptance of Bribes’ (the Opinion). The CCDI is the primary anti-corruption enforcement agency in China and is responsible for investigating corruption-related conduct by government officials. It refers criminal corruption-related conduct to the SPP, which in turn prosecutes cases before the Chinese courts.
The Opinion imposes penalties on bribe-givers, including adding bribe-givers to a blacklist that restricts their business operations in China, as well as confiscation of illicit gains obtained from bribes.
The Opinion indicates that the Chinese enforcement agencies will consider a number of factors when imposing penalties on bribe-givers, including whether the bribe-givers cooperated with investigations, their subjective intent (whether it was malicious), their remorsefulness, and forfeiture of proceeds from the bribe payments. The Opinion also indicates that the Chinese enforcement agencies will focus their investigations on bribe-givers who give “multiple bribes, large bribes, and bribes to multiple people”.
The CCDI has begun implementing the blacklist system in China. For example, in March 2022, 6 companies and 106 individuals in Hunan province were blacklisted as a result of their corruption-related conduct. They were mainly in the finance and construction industries. Their names and details of their corruption-related conduct were released to the public. In the Hunan province, the companies and individuals on the blacklist face up to 28 different types of penalties for up to one year, such as prohibition from bidding for government contracts, limited access to government subsidies, and increased inspections by Chinese government agencies. The companies and individuals will be automatically removed from the blacklist if they do not commit corruption-related conduct in the one-year time period. In the same month, two distributors of medical products were blacklisted for corruption-related conduct in Chongqing province. These distributors were banned from entering into sale and purchase agreements with medical institutions in Chongqing.
A number of major Chinese state-owned enterprises introduced their own blacklists in early 2022. For example, the China Southern Airlines Group blacklisted 26 suppliers for giving bribes to its employees during the procurement process. These suppliers were either permanently or temporarily banned from doing business with the airline depending on the severity of their corruption-related conduct and their level of cooperation with the investigations. The FAW Group, a state-owned car manufacturer, introduced a blacklist for suppliers that give bribes or gifts to its employees. Suppliers could be banned from doing business with the FAW Group ranging from one year to permanently depending on the severity of their corruption-related conduct.