Multinational bribery cases on the rise

Updated: 2014-08-01 03:40

By Zhang Yan (China Daily)

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Prosecuting departments have been handling an increasing number of cases involving bribery offered by multinational companies to government officials or State-owned enterprises, according to the Supreme People's Procuratorate.

"The worst-hit areas in terms of corruption are pharmaceuticals, the electric power sector and software," Song Hansong, director of the procuratorate's corruption prevention department, told China Daily.

The number of bribery cases being prosecuted has risen markedly across the country, Song said, but he declined to give further details.

Because State-owned companies often need to purchase equipment and components from foreign firms, some multinational enterprises saw this as an opportunity to offer huge bribes to senior managers in State-owned companies or government officials to promote their products, Song said.

Zhao Wu'an, also a senior member of the corruption prevention department, highlighted some common methods of bribery.

"Rather than directly offering cash, they usually hire agents in China to offer the bribe by other means, including supporting overseas study for their children, arranging expensive foreign holidays and, of course, depositing money in a foreign bank account."

In some cases, he said, corrupt officials in State-owned enterprises sent their children or spouses overseas to study or invest in businesses as a disguise to get passports and visas to launder money ahead of their own departure, he said.

Last year, Chinese police accused GlaxoSmithKline China, a British pharmaceutical giant, of offering huge bribes to officials and doctors to boost their product sales.

The company also faced accusations that it transferred up to 3 billion yuan ($489 million) to 700 middlemen over six years to facilitate the corruption.

Four senior Chinese executives at the company were detained, and Abbas Hussain, president of Europe, emerging markets and the Asia-Pacific for GlaxoSmithKline in Beijing, made a public apology and said the company will fully cooperate with police in the investigation.

Song said prosecuting departments face a number of practical difficulties when investigating corruption since getting their hands on evidence can be difficult as there is no paper trail.

Song said the procuratorate will increase education in State-owned companies about the dangers of corruption and offer advice on how to deal with it.

Companies will also take more steps themselves to combat the scourge, he said.

The most effective measure, he said, is to "tighten supervision of ‘naked officials' in State-owned companies".

This term refers to officials who have sent their children and spouses overseas to pave the way for their own departure, said Liu Fang, a lawyer from the All China Lawyers Association.

She also said that greater supervision over State-owned companies, especially those involved in high-cost projects, is required.