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More Bribery & Corruption

As has been noted before, bribery and corruption [1]are not exclusive to China – or to Chinese companies. Further to recent news about “Blue-Chip Bribery [2]” and “Corruption (with Foreign Characteristics [3])”, the latest round of news includes BNP Paribas and Siemens as well as a conclusion to the trial of the former head of China’s State Food and Drug Administration. The FT reports:

It seems Xu, who accepted the bribes via a friend’s bank account in Hong Kong, has already been found guilty of accepting bribes, and was been sentenced to life in prison (though this was cut to 13 years on appeal). The fallout for Liu and for BNP is still to be confirmed, but it is not clear how far BNP’s (somewhat undermined) assurance that they have “a zero tolerance policy towards any unethical practices and would never use bribes to obtain business” will go with the authorities.

In another story, from China Tech News [4], Siemens hits the headlines with a suggestion that the fallout from the bribery probe in Germany has reached China:

The suggestion is that certain individuals were paid large “consulting fees” (which by implication could be used for giving bribes) in order to win contracts.

While big foreign firms are in trouble for giving, the local takers are also paying the price. In some cases the ultimate one, as in the case of Zheng Xiaoyu [5], the former head of China’s State Food and Drug Administration, who has received the death sentence for corruption. The FT notes:

The bribe givers may also face problems like those of Siemens and BNP – as the Chinese government has ordered a review of the licensing for 170,000 drugs, most of which were approved during Zheng’s tenure.

These stories serve as a reminder that bribery and corruption are not only illegal, but are also political hot potatoes. Foreign firms, like the proverbial tall bamboo, will attract a lot of wind under the current environment [6]. At the same time, the government is all too aware that the spectre of official corruption can only undermine the building of a “harmonious society”.

As recommended in an earlier post [7], foreign companies should therefore “ensure that corporate policies on such issues are clear, and that training is combined with an occasional audit to make sure that the systems are working properly”. After all ignorance is no defense, and the risks to individual life and liberty, not to mention corporate reputation, are high.

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