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Doing business in China – Recent anti-corruption and bribery
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Bill Olsen: CFE, CAMS, CIALeader, Global Investigation and Anti-Corruption ServicesGrant Thornton LLPModerator
Allen Liao Practice Leader, Forensic, Investigative and Dispute Resolution ServicesGrant Thornton ChinaPresenter
Paul Peterson, CPA, CFE, CIA, CFFSenior Manager, Forensic, Investigative and Dispute Resolution ServicesGrant Thornton China & member of ChinaBusiness Group of Grant Thornton LLPPresenter
Anti-corruption perspective of doing business in China
Agenda
• Overview of current FCPA enforcement trends • PRC anti-corruption laws• Recent China enforcement actions • Risky business practices in China• Mitigating corruption risks
• Commitment from senior management and a clearly articulated policy against corruption
• Code of conduct and compliance policies and procedures
• Oversight, autonomy and resources• Risk assessment• Training and continuing advice• Incentives and disciplinary measures• Third-party due diligence and payments
Shift from the FCPA to the local PRC anti-corruption laws
• Recent uptick in enforcement actions by the Public Security Bureau, Administration of Industry and Commerce, National Development and Reform Commission, and multiple other regulatory agencies in China
• Article 164 makes it unlawful to offer “money or property to the staff of a company or enterprise for an illegitimate benefit”
• May 2011 – Amendment to article 164 inserts the concept of the public official
• Law prohibits the act of giving “money or property” (“财物” ) to any foreign government official or official of a public organization to “obtain an improper commercial benefit” (“为谋取不正当商业利益” )
• Applies to all PRC citizens (even those who are abroad) and all persons physically in the PRC, even though they may not be of PRC nationality
• Article 164 is four sentences in length• No specific books and records provision within the criminal law
Instances of fraud remain a constant threat to management within an organization. Management is beginning to look for ways to manage fraud risks inside their organization, which include the following:
• Understand and prioritize fraud risks in China that can have a negative effect on an organization’s business and reputation.
• Determine what anti-fraud elements can be implemented that are most effective in China.
• Look for ways that controls can prevent, detect and respond to an identified fraud risk.
• Determine whether the anti-fraud elements that have been incorporated are operating effectively and efficiently to reduce instances of fraud.
• Identify credible and relevant independent sources.
• Obtain in-depth information on the backgrounds, operation and actual relationships of individuals and entities.
• Identify issues and information not reflected in the deal documents, such as criminal, tax, labor, debt, organized crime issues, suppliers, shareholder nominees and environmental issues.
Bill Olsen: CFE, CAMS, CIALeader, Global Investigation and Anti-Corruption ServicesGrant Thornton LLPT: (703) 847-7519E: [email protected]
Allen Liao Practice Leader, Forensic, Investigative and Dispute Resolution ServicesGrant Thornton ChinaT: +86 (21) 2322 0210E: [email protected]
Paul Peterson, CPA, CFE, CIA, CFFSenior Manager, Forensic, Investigative and Dispute Resolution ServicesGrant Thornton China & member of ChinaBusiness Group of Grant Thornton LLPT +86 159 2126 2911 E: [email protected]
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