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Graft-ridden arbitration system on trial as Beijing seeks to boost its credibility

A corruption scandal involving copy giant Fuji Xerox's Chinese subsidiary gained traction yesterday after a lawyer involved in the case was suspended by his firm.

Zhang Decai, a lawyer at Beijing-based law firm Zhonglun Jintong, was suspended and 'severely reprimanded', for his role in at least one secret meeting between lawyers representing Fuji Xerox and arbitration officials overseeing a dispute between Fuji and one of its clients, according to a statement from the firm.

The original dispute began when Tianjin Guangyin Real Estate filed for arbitration in August 2003,  claiming Fuji Xerox sold it faulty printers worth 2.5 million yuan.

Last month a video clip of a secret dinner meeting between Mr Zhang, Fuji Xerox's in-house legal counsel Chen Zhenwei and a government arbitration official surnamed Qi was posted on the Web. The video was filmed by Tianjin Guangyin employees last July.

In November, the arbitration commission ordered Fuji to pay just over 100,000 yuan in damages, far less than the claimant's demand for full reimbursement.

The Tianjin Arbitration Commission said yesterday that it was investigating the individual arbitrator involved.  Zhonglun Jintong and Fuji Xerox issued statements acknowledging the meeting was against regulations and inappropriate but denying all charges of bribery or corruption.

'We are not sure yet whether other government departments [responsible for investigating corruption cases] are involved,' said a Fuji Xerox spokesperson.

Bribery and corruption is endemic in mainland arbitration cases, but mainland  lawyers say the fact that this case has received so much attention is a  sign  showing  it is becoming less acceptable.

'The government is very conscious that it needs to put a workable dispute resolution system in place,'  said Christopher Stephens, a lawyer  at Orrick, Herrington & Sutcliffe. 'They've made great strides over the last 10  years but many of our clients are not yet fully comfortable with domestic arbitration in China.'

In a separate case  last October,  Fuji Xerox customers accused the  firm of smuggling film and photo paper into the Chinese market.  Fuji denies the charges and the government is yet to take any action.

A number of Japanese  firms complain that the anti-Japanese sentiment which boiled over into widespread protests last year  has made doing business  in China more difficult and in some cases  has been exploited by competitors.



Lawyer suspended as Fuji corruption probe's net widens