Critics doubt anti-bribery stance
China has a patchy record when it comes to clamping down on bribes offered by its firms that are venturing abroad, say observers, and it remains to be seen if stricter laws will be enforced by corporate watchdogs.
Tham Yuet Ming, a Hong Kong-based partner at DLA Piper, a law firm in the United States, said: 'China has not shown consistency in the enforcement of its laws, so it is difficult to tell if there will be consistency in the enforcement of its amended anti-bribery legislation.'
Since May last year, Chinese firms operating abroad have been subject to tightened anti-corruption provisions contained in amendments to Article 164 of China's Criminal Law. The provisions expanded the scope of China's existing anti-corruption laws by criminalising the offering and giving of bribes to foreign officials and officials in international public organisations.
'In practice, it will be difficult to enforce Article 164,' Tham said.
'If the bribery happens abroad, there may be practical difficulties getting evidence and you need the co-operation of foreign governments or prosecutors.'
Tham said he doubted whether Article 164 would be enforced with the same rigour as the Foreign Corrupt Practices Act (FCPA) under which US firms operate, or the UK Bribery Act.
'Is Article 164 going to be enforced at the same level as the FCPA? Probably not, but the key point is [that] this is a move in the right direction for the Chinese government and brings them in line with countries in the OECD,' Tham said.
While the principle underlying the amendments was that the Chinese anti-bribery law would be brought in line with international practice, corporate competitors are yet to be convinced.
Beijing is aggressively encouraging Chinese firms to expand abroad as part of its 'going out' strategy. So far, Chinese firms have invested more than US$300 billion in 178 countries. In 2010, China's overseas investments rose 21.7 per cent to US$68.8 billion.
But the extent to which bribery was oiling the wheels of this outward- bound investment remains a matter of conjecture.
Lizzie Parsons, a campaigner for Global Witness, a British non-governmental organisation, said: 'It remains unclear whether the Chinese government is serious about prosecuting individuals and companies who have broken the law.'
Several instances of bribery have been reported and China ranked a lowly 75th out of 183 countries in Transparency International's corruption index last year.
Given this patchy record, the tightening of the anti-corruption law was a step in the right direction, said Kent Kedl, China and North Asia managing director at Control Risks, an international risk consultancy.
'It's good that the law has been passed. The law is important in itself because it sets some kind of a standard,' Kedl said. 'However, the law is only the first step. A lot more needs to happen.' He said a concerted effort to raise awareness of the law among Chinese firms was needed. 'In the minds of some Chinese companies, bribery is how business is done. They know of no other way.'
China's anti-corruption law would only become effective in practice if watchdogs were given expanded policing powers, said Tara O'Connor, managing director of Africa Risk Consulting.