The Foreign Corrupt Practices Act (FCP A) prohibits the payment of bribes to foreign officials in order to obtain or retain business. The United States Department of Justice (DOJ) has adopted a broad and expansive definition of several key elements of this statute, including the meaning of a "foreign official." The approach by the DOJ should raise special concerns for multinational corporations (MNCs) doing business in the People's Republic of China (PRC or China) and their in-house counsel because the DOJ's aggressive positions apply with special force in China. For all of its recent economic reforms, China continues to be a one-party authoritarian state, which means that many persons who appear to be ordinary business people may qualify as foreign officials under the aggressive interpretations of the DOJ and that payments or benefits given to such persons might be covered under the FCPA. In addition, the business culture of China has traditionally tolerated the use of payments and gifts as a common way of doing business. This creates additional risks for MNCs because PRC officials will often demand benefits that might fall under the FCP A and because employees working in the field often are eager to provide such benefits.
Given the unique features of China's economic and political system, the attractiveness of China as a place to do business for MNCs in the modem global economy, and the aggressive positions of the DOJ, there are many pitfalls and traps that may await the MNC doing business in China. In response to these concerns, MNCs need to implement an effective on-theground FCPA compliance program to mitigate these risks.
Description
Symposium: The Changing Role and Nature of In-House and General Counsel
