China Law Blog - Giving Gifts In China. Giver Beware. - Comments

Twofish

Dan — Tue, 27 Jul 2010 21:58:14 -0800

Dan: The risk stems from China's defining state functionaries far more broadly than we do in the West.

I don't think this is true at all.

I can't think of anyone that would be included in the Chinese definition of state functionary that would be excluded by the Foreign Corrupt Practices Act definition of "foreign official". Looking at the anti-corruption rules it seems that the copied them pretty much verbatim from Western laws, particularly the FCPA.

Now it is true that the FCPA definition of "foreign official" includes a lot of people that wouldn't be considered "government officials" in common discourse, but the USDOJ has made it very clear (i.e. they've prosecuted people for this) that Chinese SOE managers are "foreign officials" for the purpose of FCPA and the courts have backed them up on this.

Tim Martin

Dan — Tue, 27 Jul 2010 21:58:14 -0800

Great post Dan. I'm curious as to whether or not membership in the CCP is, (or more importantly, in cases of business disputes, could be) interpreted as a meeting the threshold of "state functionary" ? The party IS the state, after all. I'm concerned about Party members who work in private enterprises, and the risk of foreign firms applying the wrong definitions.

It would be nice to see how these Chinese rules compare with the equally-as-important Foreign Corrupt Practices Act, too. Lord knows we have plenty of of clueless people in the US who view any company who conducts business in China with suspicion.

Dan

Dan — Tue, 27 Jul 2010 21:58:14 -0800

@TwoFish,

I did not mean to compare how we think of functionaries under the FCPA and how the Chinese government thinks of functionaries under its corruption laws. What I was trying to convey was that in everyday life, most businesspeople do not think of a mid-level manager as being a government official. I am going to go back and clarify.

Dan

Dan — Tue, 27 Jul 2010 21:58:14 -0800

@ Tim Martin,

"providing paid hospitality or paying for the travel expenses of a person who is a party member or civil servant may be considered a type of "unfair competition activity" under the Central Leadership Group of the Anti-Commercial Bribery Administration's Opinion on Accurately Mastering the Policy in dealing with Commercial Bribery on May 28,2007("2007 Opinion")."

Twofish

Dan — Tue, 27 Jul 2010 21:58:14 -0800

In practice you are unlikely to have any dealings with Chinese party officials that have no state title. Any significant party official is going to have some state title.

Also FCPA *explicitly* includes party officials in its definition of foreign official.

ehs

Dan — Tue, 27 Jul 2010 21:58:14 -0800

In the end, aren't you just saying that we all must be incredibly careful in giving gifts because we really don't know if the person to whom we are giving the gift is a government official or not and the rules on amounts are pretty unclear?

Eric W.

Dan — Tue, 27 Jul 2010 21:58:14 -0800

The China Law Insight blog did an glorious post a couple of months behind upon a authorised perils of present giving in China . The post is entitled, “Offering Gifts of Travel as well as Entertainment in China – What if a Recipient is a State Functionary.
It is illegal in China to give "money or property" to a state functionary to obtain an "undue advantage." In large part, the risk stems from China's defining state functionaries to far more broadly than we typically think of that term in an everyday context in the West. State functionaries "includes persons who hold office in state organs, employees of state-owned companies and others who perform official duties according to the law. Foreign companies supplying infrastructure, teaching materials and hospital equipment in the Chinese market are examples of，those which deal with state functionaries on a regular basis.
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Business of

Brian

Dan — Tue, 27 Jul 2010 21:58:14 -0800

This sort of thing is ridiculously confusing, made more so by the fact that a company like mine has to deal with the laws of multiple countries (the UK, the US and China). We have instituted a no gift policy under any circumsantces. It makes it less "friendly" for us, but it is about the only safe clear way to proceed.

Ringo

Dan — Tue, 27 Jul 2010 21:58:14 -0800

This whole area is a minefield, what with the FCPA and the Chinese government using these sorts of things selectively. My position is to not give out anything. Safer that way.