3. Paul Schmidt 舒明德
AGENDA
• Learn the elements of the law against
corruption
• Apply those elements to case studies
4. Paul Schmidt 舒明德
World Bank
estimates over
$1 trillion in
bribes are paid
each year
• $2.5 billion each day
• $100 million each hour
• 3% of the world’s
economy
5. Paul Schmidt 舒明德
US$ 100 million US$ 1 trillion
From: http://www.pagetutor.com/trillion/index.html
How much is $1 trillion?
11. Paul Schmidt 舒明德
The US Foreign Corrupt Practices
Act (“FCPA”)
• Bribery Provisions
Basically require US businesses and citizens from making
“corrupt” payments to foreign officials. They also apply to
foreigners who undertake an act in furtherance of a “corrupt”
payment which touches upon US territory.
• Recordkeeping Provisions
Basically require publicly traded companies in the US to
maintain certain recordkeeping and accounting practices.
13. Paul Schmidt 舒明德
“The FCPA’s anti-bribery provisions apply broadly to
three categories of persons and entities:
(1) “issuers” and their officers, directors, employees, agents,
and [some] shareholders;
(2) “domestic concerns” and their officers, directors,
employees, agents, and [some] shareholders; and
(3) [foreigners who further a corrupt payment] . . . while in the
territory of the United States.”
A Resource Guide to the U.S. Foreign Corrupt Practices Act, pg. 10
14. Paul Schmidt 舒明德
Who is an “issuer”?
• Any company with a
class of securities
listed on a US security
exchange
–And its officers,
directors, employees,
and agents
• Includes 940 foreign
companies
Aluminum Corp. of China Ltd.
China Eastern Airlines Corp. Ltd.
China Life Insurance Co. Ltd.
China Petroleum & Chemical Corp. (Sinopec)
China Southern Airlines Corp. Ltd.
China Telecom Corp. Ltd.
Guangshen Railway Co. Ltd.
Huaneng Power International Inc.
PetroChina Co. Ltd.
Baidu, Inc.
Sina Corp.
15. Paul Schmidt 舒明德
Who is a “domestic concern”?
“A domestic concern is any individual who is a citizen,
national, or resident of the United States, or any corporation,
partnership, association, joint-stock company, business trust,
unincorporated organization, or sole proprietorship that is
organized under the laws of the United States or its states,
territories, possessions, or commonwealths or that has its
principal place of business in the United States.”
–And its officers, directors, employees, and agents
A Resource Guide to the U.S. Foreign Corrupt Practices Act, pg. 11
16. Paul Schmidt 舒明德
Territorial Jurisdiction?
“[F]oreign persons and foreign non-issuer entities that, either
directly or through an agent, engage in any act in furtherance
of a corrupt payment . . . while in the territory of the United
States.”
–And officers, directors, employees, and agents acting on
behalf of such persons or entities
A Resource Guide to the U.S. Foreign Corrupt Practices Act, pg. 11
17. Paul Schmidt 舒明德
Territorial Jurisdiction?
“[J]urisdiction confer[red] whenever a foreign company or
national causes an act to be done within the territory of the
United States by any person acting as that company’s or
national’s agent.”
A Resource Guide to the U.S. Foreign Corrupt Practices Act, pg. 107 note 55
18. Paul Schmidt 舒明德
What constitutes an act in the US?
• Can be as big as:
–Attending a meeting in the US to plan the scheme
• Or as little as:
–Using the US mail to further
–Placing a telephone call to the US to further
–Sending an email to the US to further
–Using money that ran through the US banking system to
further
A Resource Guide to the U.S. Foreign Corrupt Practices Act, pgs. 11&12
19. Paul Schmidt 舒明德
FIFA Bribery Scandal
• Jack Warner
–Trinidadian
• US bribery case
against him based, in
part, on his causing
money to first be
wired to a Trinidad
account and then to
his personal account
www.telegraph.co.uk
20. Paul Schmidt 舒明德
The Business Purpose Test
“The FCPA applies only to payments intended to induce
or influence a foreign official to use his or her position ‘in
order to assist … in obtaining or retaining business for or
with, or directing business to, any person.’”
• Bribes made in order to obtain or retain business
A Resource Guide to the U.S. Foreign Corrupt Practices Act, pg. 12
21. Paul Schmidt 舒明德
Examples of Actions to Obtain or
Retain Business
• Winning a contract
• Influencing the procurement process
• Circumventing the rules for importation of products
• Gaining access to non-public bid tender information
• Evading taxes or penalties
• Influencing the adjudication of lawsuits or enforcement actions
• Obtaining exceptions to regulations
• Avoiding contract termination
A Resource Guide to the U.S. Foreign Corrupt Practices Act, pg. 13
22. Paul Schmidt 舒明德
The FCPA forbids corrupt:
–Payments
–Offers to pay
–Promises to pay
–Gifting
–Authorization to pay or gift
ANYTHING OF VALUE
A Resource Guide to the U.S. Foreign Corrupt Practices Act, pg. 14
23. Paul Schmidt 舒明德
Anything of Value
• Cash
–Consulting
Payment
–Training
–Honorarium
–Charitable
Contribution
24. Paul Schmidt 舒明德
Anything of Value
• Gifts
–The FCPA does not
prohibit gift-giving.
Rather . . . the FCPA
prohibits the payments
of bribes, including
those disguised as gifts.
A Resource Guide to the U.S. Foreign Corrupt Practices Act, pg. 16
25. Paul Schmidt 舒明德
Characteristics of Appropriate Gift
Giving
• Open and transparent
• Properly recorded in books and records
• Reflect esteem or gratitude
• Permitted under local law
30. Paul Schmidt 舒明德
• “[T]he FCPA broadly applies to corrupt payments to
“any” officer or employee of a foreign government and
to those acting on the foreign government’s behalf.”
• It applies to low-ranking employees and high-level
officials alike.
• It applies to foreign government departments,
agencies, and instrumentalities.
A Resource Guide to the U.S. Foreign Corrupt Practices Act, pg. 20
31. Paul Schmidt 舒明德
Examples of Foreign Officials
• Ministers
• Agency officials & employees
• State owned enterprise officials & employees
• Officials and employees of state-controlled entities
– Aerospace
– Defense manufacturing
• Officials and employees of state instrumentalities
– Universities
• University professors?
Brought to you by the good people at Arm & Hatchet. Their work, and the many like them, have financed this trip and have made it possible for me to be here today.
Arm and Hatchet previously available a Jenny Lu.
Stacks of US$ 100 bills.
1,000,000,000,0000
10,000 pallets
10,000,000,000 per row x 100 rows
Notice in the trillion picture the pallets are stacked 2 deep.
Depressing – but far from hopeless.
Some judges – but not all judges.
A great number of very good people in China. People I work with . . . . Inspirational . . . savvy. . .
I used to tell clients – we may loose in the lower court, but once we go up the ladder on appeal, we should be okay.
Zhou, 72, was convicted of taking bribes of about 130 million yuan ($21.3 million).
In a breakdown of the ruling, Xinhua reports that Zhou received a life sentence for accepting bribes worth 130m yuan ($21.3m; £13.8m), seven years for abuse of power and four years for "deliberately releasing state secrets".
Only three years ago, Mr. Zhou sat with Mr. Xi on the nine-member Politburo Standing Committee, which governs the country. Now he is the most senior leader to be jailed for corruption in more than 65 years of Communist rule.
I used to tell clients – we may loose in the lower court, but once we go up the ladder on appeal, we should be okay.
The Bo Xilai scandal along with the financial disclosures of leading government officials has pretty conclusively ended the idea that higher is cleaner. In fact, it may be just the opposite.
In 2010, Huang Songyou, one of the vice-presidents of the Supreme People’s Court (SPC), along with three other SPC judges, was convicted of bribe-taking and embezzlement. Huang was sentenced to life imprisonment.
Corruption appear to be deeply entrenched.
In 2002, a corruption scandal “exploded” in the Wuhan Intermediate Court
(Hubei Province). The scandal involved two vice-presidents of the court, three
deputy divisional directors, seven mid-rank judges and one court clerk, who
allegedly took bribes on various occasions from 44 lawyers.
A new president of the court was appointed, Zhou Wenxuan. Zhou immediately
launched his “eight-commitments” campaign to raise judicial efficiency and accountability.
At the same time, a public ceremony was held in the course of which 236 judges from the court swore not
to engage in corrupt activities.
Three years later, Zhou was found to have been taking bribes
intermediated by his wife since and before he became president.
Then in 2011, six more judges
from the same court were suspended pending corruption investigations.
Other jurisdictions with similar entrenched corruption issues:
Shenzhen Intermediate Court,
Fuyang Intermediate Court (Anhui Province),
Jilin High Court (Jilin Province) and
Chongqing High Court (Chongqing Municipality)
HOW MUCH ARE JUDGES PAID?
On March 1, 2013, I spoke with a knowledgeable source concerning judicial salaries in the PRC.
This person mentioned what is commonly known that salaries between different areas in China differ. The difference is based on the economic circumstances in each area. The more developed an area, the more likely it is that judges will receive higher salaries. In less developed areas, judges will receive lower salaries.
The source went on to say that these differences also exist within cities. So for instance, in Shanghai, the Higher People’s Court judges are currently paid 120,000 RMB per year.
However, in Pudong, lower court judges there are paid 180,000 RMB per year.
Note, the above figures did not include housing. Recently, judges are left to their own devices to find housing in the areas they work.
Under present conversion rates, 120,000 RMB = USD 19,300. 180,000 RMB = USD 28,900.
On March 1, 2013, I spoke with a second knowledgeable source concerning judicial salaries at the number 2 Intermediate Court in Beijing, the IP division.
This particular individual said that ordinary judges were paid 80,000. This also included the use of an apartment. The apartment was free. In addition, it was possible to receive the bonus. The bonus would be maybe 10,000 RMB. In addition, other small items were provided from time to time. One item of particular value was the opportunity to participate in outside training. From time to time, people would be rewarded with the opportunity to attend outside training and that would come with an additional 3000 to 5000 RMB to attend the training. A person could also make money from publishing articles, maybe around 200 RMB.
Court leaders (Ting Zhang) are paid roughly 30% more.
There were 940 foreign companies registered with the SEC as of December 31, 2013.
Ex-FIFA vice-president Jack Warner.
Sepp Blatter.
182. Upon the defendant JACK WARNER's request and as
payment on the TTFF contract, on or about June 1, 2005, Traffic
USA executives wired $40,000 from an account at Citibank in
Miami, Florida to a correspondent account at Wachovia Bank, for
further credit to the LOC Germany 2006 Limited account at First
Citizens Bank in Trinidad and Tobago.
183. Five days later, ,on or about June 6, 2005, the
defendant JACK WARNER transferred $40,000 from the LOC Germany
2006 Limited account to another bank account held in his name .
