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Identifying Chinese Companies For FCPA Violations Conflicts With The OECD Convention


Perhaps it is neither here nor there 40 years later, but the FCPA’s legislative history is clear that Congress enacted the Foreign Corrupt Practices Act motivated primarily by selfish foreign policy reasons, not altruistic do-good reasons. (See here for the article “The Story of the FCPA”).

I was reminded of this when reading this recent DOJ press release announcing its China Initiative. Among the ten specifically identified components of the initiative is the following: “identify Foreign Corrupt Practices Act (FCPA) cases involving Chinese companies that compete with American businesses.”

Identify does not exactly mean target, nevertheless this component of the initiative conflicts with U.S. obligations under the OECD Convention on Combating Bribery of Foreign Public Officials In International Business Transactions.

Specifically, Article 5 of the OECD Convention states:

“Investigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each Party. They shall not be influenced by considerations of national economic interest, the potential effect upon relations with another State or the identity of the natural or legal persons involved.”

Identifying Chinese companies is focusing on the identity of the legal person involved.

Identifying Chinese companies that compete with American businesses is a consideration of national economic interest.

In short, the above component of the China Initiative is an unwise law enforcement move and is in conflict with the OECD Convention (a document the DOJ has pledged allegiance to in other contexts – see here and here). Rather, the DOJ should just follow the facts and, assuming there is jurisdiction against a Chinese company, enforce the law.

For what it is worth, back in 2008 when I was in private practice, I wrote this article for China Law & Practice titled “Why Compliance with the US Foreign Corrupt Practices Act Matters in China.” In pertinent part, the article discusses how Chinese companies and Chinese business executives can directly be subject to US prosecution for violating the FCPA and noted “although no Chinese issuer has yet been prosecuted in the US for FCPA violations, it is likely only a matter of time before a Chinese issuer becomes entangled by the broad reach of the FCPA.”

Quite frankly, I am surprised it has not yet happened and these pages from time to time have addressed this issue (see here for a 2009 post, here for a 2017 post titled “Might Sinovac Become the First Chinese Issuer to Resolve an FCPA Enforcement Action?” and here for a 2018 post answering that question in the negative).

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