Big improvement in the legal system is called to effectively combat commercial bribery
　　In May 2005, the U.S. Department of Justice slapped a massive $4.79 million penalty on the Los Angeles-based Diagnostic Products Corp. (DPC), for violating the U.S. Foreign Corrupt Practices Act.
　　Investigators found that the China subsidiary of DPC--DPC Tianjin--paid approximately $1.6 million in bribes, to secure business opportunities with select hospitals. The bribes, in the form of illegal commissions given to physicians and laboratory personnel employed by state-owned hospitals, reportedly took place between late 1991 and December 2002. DPC Tianjin is said to have earned approximately $2 million in profits from business generated in this manner.
　　In this case, DPC was severely punished under U.S. law, but, in 11 years of bribery, the company had never shown up on the radar of the Chinese corruption watchdog. Ironically, almost one year after the U.S. Department of Justice issued its ruling against DPC, there is no report of any bribe takers in those Chinese medical institutions being punished under Chinese law. This exposes a huge tear in the fabric of China’s supervision on commercial bribery.
　　
　　Anti-bribery laws do exist
　　
　　On the face of it, China is not short of laws against commercial bribery. As early as 1993, the Law Against Competition by Inappropriate Means of China clearly states it is forbidden to carry out commercial bribery. It states that business people are barred from using money or properties, or any other methods, to bribe others in order to sell or purchase commodities. Under the law, people will be guilty of bribery if secret commissions are paid to and accepted by organizations or individuals without the normal accounting procedures.
　　In 1996, the State Administration for Industry and Commerce promulgated a regulation banning outright commercial bribery. And punishment is severe. The Criminal Law of China states that those who conduct bribery are liable for imprisonment and even the death sentence, in severe cases.
　　Yet despite these deterrents, commercial bribery continues to run rampant.
　　A recent investigation into the DPC case by People’s Daily, a leading Chinese newspaper, shows that no action has been taken against those who received kickbacks.
　　An anonymous source at the Tianjin Municipal Administration for Industry and Commerce told the paper, according to the Law of Administrative Penalty of China, if an illegal act is not discovered by the administrative department within two years of its occurrence, those involved will not receive administrative punishment.
　　When it comes to the DPC case, bribes had allegedly taken place between 1991 and 2002, but the local industry and commerce administration only got wind of it from media reports in 2005, three years later. As a result, no record was made of this case in China. In addition, the administration said it did not find any illegal business operations at DPC Tianjin in the last two years.
　　Officials of the People’s Procuratorate of Tianjin also revealed that after the DPC case was exposed in the media, they conducted an investigation. But investigators concluded that although those taking bribes were government employees (presidents and section heads of public hospitals), the amounts involved were not large enough to be considered a crime or be recorded as bribes. The procuratorate therefore did not proceed further with the DPC case.
　　Chen Baoku, a law professor at Tianjin-based Nankai University, believes the DPC case is a watershed for China, as it exposes the difficulties in taking legal action on commercial bribery. Chen said those difficulties are interconnected and the major problems result from insufficient laws and regulations as well as the ineffective justice system.
　　
　　Improve the justice system
　　
　　According to current Chinese statutes, the following departments have the power to investigate and file a case against commercial bribery: the procuratorate, court, industry and commerce department, taxation department, supervision agency and audit office.
　　The procuratorate is responsible for investigating the concerned civil servants and those who work for public service units, and the police will probe the involved business people. If the case is not serious and is not considered a crime, the industry and commerce department will deal with it. The duplicate supervisory system appears capable of combating commercial bribery. However, due to internal inconsistencies within the system, and given that everyone has the right to investigate, clashes are inevitable. Moreover, different departments may have different criteria about the same case, resulting in an inability to operate from a standard point.
　　Apart from the problems brought about by separate supervisory bodies, commercial bribery today has taken on many guises. Offering kickbacks or discounts on purchases leads to difficulties in tracking wrongful conduct. The industry and commerce department explains that it can only look for problems in a company’s financial records, but it cannot follow bribery once it moves beyond the company’s borders. Furthermore, the industry and commerce department does not have the authority to shut down companies involved in bribery cases and detain concerned personnel. These factors make it difficult to track bribes given in kind, making it easy for guilty parties to evade detection.
　　In February this year, the State Council, China’s cabinet, issued a notice with several guidelines to deal with commercial bribery. The document said when each department prescribes its own administrative rectification measures, they must establish an information sharing mechanism with other departments.
　　An official from the Central Commission for Discipline Inspection of the Communist Party of China said the close cooperation between judicial and law enforcement departments is setting the groundwork for future interaction.
　　“When clues concerning serious bribery and corruption cases are found, the lack of communication and an information sharing mechanism will, to some extent, weaken the effort to crack down. This will definitely be detrimental to the task of combating commercial bribery,” said Wang Chengqing, a financial expert with the central bank.
　　
　　Get the laws to work
　　
　　Though several laws in China are thought helpful in the fight against commercial bribery, Professor Chen said they fail to give a clear definition in this regard.
　　For example, in the Criminal Law, the guilt relevant to bribery is divided into two parts, the crime of accepting bribes by civil servants, and the crime of destroying financial order. The criminal subject of the former is the civil servant, and that of the latter is mainly the employee of companies, banks and other financial institutions.
　　Professor Chen said the definition of the subject of bribery prescribed in the Criminal Law is too narrow, which leads to ineffective crackdowns on the varied cases of bribery prevalent in modern society. In fact, workers at some public work units, though they are neither civil servants nor company employees, could still be made responsible for public procurement and become involved in bribery. For example, according to current laws, doctors who take kickbacks from selling medicines are likely to escape legal punishment.
　　Furthermore, the current laws only define bribery as the practice of offering money and some other valuable items in order to gain an illicit advantage. But these days, there are more diversified ways to bribe someone, for example, providing sex partners and arranging for overseas travel. A cash bribe is usually disguised as a commission charge, transportation allowance or teaching or consultation fees, which probably causes confusion.
　　It is also difficult to determine the responsibilities of those involved in commercial bribery, as no laws exist for this purpose.
　　Liu Chunquan, a lawyer from Guangsheng & Partners Attorneys-at-law, complained that there is no law in China clearly defining the responsibilities of shareholders in cases of bribery. And there is no definition of what constitutes conspiracy.
　　It is reported that DPC reported irregularities in its China unit to the U.S. Department of Justice after making initial findings in a self-examination. Liu said although the conduct of DPC overseas subsidiaries did not fall under the jurisdiction of the Foreign Corrupt Practices Act, according to the U.S. law, the parent company has the obligation to require subsidiaries to establish internal controls and effective accounting systems.
　　Liu suggests commercial bribery should be listed as a crime in future law amendments.
　　Ren Jianming, a professor at the School of Public Policy and Management of Tsinghua University, said China deals with commercial bribery according to the Criminal Law, which will lead to unavoidable problems. In line with the international practice, Ren said the role of criminal penalties in combating commercial bribery should be reduced, while the pressure of monetary fines needs to be increased.
　　The professor said that in China, the acceptance and punishment criteria of commercial bribery cases are based on the bribery amount. However, he pointed out, the bribery amount doesn’t necessarily show the economic impact arising from it, because most bribes are small amounts, from which large benefits will be retrieved. According to Ren’s studies, bribes make up a paltry 1 percent of the total economic losses caused by corruption in the construction sector.
　　Ren said the economic punishment currently imposed is too small and has little deterrent on those who can make a profit 10 times higher than the fines imposed. He advocates the establishment of an impeachment system.
　　As commercial bribery is usually hard to detect, Ren suggests the legislature take the following aspects into consideration. First, drawing on the U.S. judicial practice, people who inform against commercial bribery should be protected by the government from possible vengeance by criminals. Second, relevant departments should enact articles to reward the informant. for instance, those who inform against bribery should receive part of the penal sum imposed by the government. In this way, Ren said, people would actively participate in the fight against bribery.
　　
　　Experts’ Suggestions
　　
　　In the last two years, the legal fraternity has repeatedly called for an anti-commercial bribery law.
　　At the end of 2005, a criminal law amendment was submitted to the National People’s Congress, China’s top legislature, which expands the scope of those liable for punishment to employees of public service units, like hospitals and schools, outside the commercial net.
　　However, many scholars believe the effort should not stop here and want a far more efficient and effective legal net.
　　“It is time to enact an anti-commercial bribery law,” said Professor Chen Baoku at Nankai University.
　　According to Chen, as the articles concerning commercial bribery are so widely dispersed in other laws and regulations, it is necessary to integrate and enact a comprehensive anti-commercial bribery law. He proposes that a special institution should be responsible for investigating commercial bribery.
　　He also agrees with Ren Jianming, a professor at Tsinghua University, in calling for an incentive system to encourage more people to report commercial bribery incidents and for China to promulgate its own foreign corrupt practices act.
　　

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