Corruption Prevention & Compliance
For more than 10 years by now, corrupt actions, i.e. the granting of unlawful benefits in business competition as well as in contact with government officials, were to be prosecuted according to German criminal law, even such misconducts were committed abroad. This results in considerable legal risks for German companies in countries such as China.
For one, in China, building business relationships with government officials and business partners is vital to business success, often associated with hospitality, invitations, gifts, and the like. However, these are normally taken as unlawful benefits under the German law, it therefore must always be made sure that they still remain within the limits of the permissible. This is not always easy; as such invitations are traditionally much more expensive in China than in Germany.
On the other hand, direct bribery is more common in China than in Germany. In addition to restraining own employees from involvement of corruption offenses, it is important to ensure that sales agents, consultants, and other service providers working for the company do not use commissions and fees received for bribery to obtain orders and/or approvals for the company.
Finally, of course, the Chinese anti-corruption rules are to be observed too. While in the past corruption proceedings against foreign companies were hardly brought forward in China, this situation has changed significantly in the recent years. The sanctions according to Chinese law are draconian. Penalties against companies are often in the hundreds of millions, and against individuals directly responsible for the misconducts go as far as death penalty.
To avoid such risks, we recommend a holistic approach combining a variety of coordinated measures:
- Establishing a clear code of conduct for all employees
- Training on these guidelines for all employees
- Inclusion of anti-corruption clauses in all contracts with external service providers, which allow refusal of payment and termination of the contract in case of a suspicion of corruption,
- Formulation, implementation and documentation of standardized internal processes for all corporate activities that are in danger of corruption
Our consulting services in the area of corruption prevention & compliance include:
- Advice on all applicable German and Chinese laws as well as possibly laws of other jurisdictions
- Creation of internal processes for guaranteeing legally compliant company activity, in particular in dealing with external Chinese service providers
- Preparation of a code of conduct tailored to Chinese situations
- Employee training in all compliance-relevant areas
- Advice on the handling of individual cases