On 1 March 2021, Amendment XI (the Amendments) to the Criminal Law of the People’s Republic of China (the 2017 Criminal Law), took effect. Among other ramifications, the Amendments significantly increase the penalties for private individuals (i.e., non-state functionaries) who are convicted of corruption, including soliciting or accepting bribes, embezzling company assets, or misappropriating company funds. The Amendments also add a new sentencing standard applicable to private sector corruption. These Amendments bring the levels and standards of penalties imposed on private corrupt actors, in line with those previously reserved for corruption by state functionaries.
This alert examines the above changes to the 2017 Criminal Law, and key considerations for multinational companies with operations in China.
1. Increased criminal sentences for private sector corruption
The 2017 Criminal Law previously set two sentencing levels with respect to non-state functionaries convicted of corruption. Violations involving “relatively large” amounts were punishable with imprisonment for a term of up to five years. Longer imprisonment terms were reserved for violations involving “huge” amounts. The Amendments create a third sentencing level for corruption involving “especially huge” amounts, resulting in increased maximum criminal penalties for the various corruption-related offences.
For example, under the 2017 Criminal Law, the highest sentencing level for the crime of accepting or soliciting bribes of a “huge” amount, was a minimum of five years’ imprisonment, and, under certain circumstances, the confiscation of property. The Amendments create an additional sentencing level for accepting or soliciting bribes of an “especially huge” amount, which now result in imprisonment for a term of 10 years to life, and a fine. In this respect, the Amendments bring the sentencing levels for non-state functionaries into line with those previously applied to state-functionaries for the same offences.
The below chart illustrates the key differences in the sentencing levels applicable to non-state functionaries found guilty of accepting bribes, embezzlement, or misappropriation, by non-state functionaries.