Chinese companies are among those organisations warned to
take heed of US
anti-bribery legislation after fresh guidance from US authorities,
international law firm Freshfields Bruckhaus Deringer has warned.

The US Department of Justice and Securities and Exchange
Commission have spelled out how the US Foreign Corrupt Practices Act (FCPA)
operates and give examples of China
in terms of gifts and hospitality, among other cases.

"The FCPA has broad reach. It covers actions anywhere
in the world by US companies, US issuers or US citizens,” Geoff Nicholas, head
of the law firm’s international commercial disputes group and co-head of its
global investigations practice, said in a statement emailed to this
publication.

The warning comes at a time when governments, such as the UK’s,
have recently enacted anti-bribery legislation to stamp out what are regarded
as improper business influence in the form of luxurious gifts and hospitality. Among
industries that are urged to take note of such laws are wealth management. (To
view an article on the issue of kickbacks and fraud in Asia,
click here.)

Freshfields’ Nicholas said US
anti-bribery legislation is potentially global in scope, touching regions such
as Asia due to joint ventures with local firms
and individuals.

“US issuers covers any company listed on a national
securities exchange in the US
(whether stock or American Depository Receipts). The FCPA also covers any company
or individual - not just US - where some part of the wrongful conduct takes
place in the US.
In one case, the DoJ took the position that this extended to a situation where
the only connection to the US
was that the bribe was paid in US dollars, transferred through a correspondent
account in the US.
Meetings in the US or
telephone calls or emails to people in the US
in connection with the bribe may also be said to be enough for a US prosecution,"
he said.

And he warned that joint ventures between the US and China could give rise to problems.

"Specifically, a joint venture between a US company and
a Chinese company may fall within the scope of the FCPA. First, the US
company may be said to be liable for any payments made by its Chinese joint
venture partner on behalf of the joint venture. Secondly, the Chinese company
may be exposed if there are communications with its US joint venture partner about the
payment,” he said.

"It is difficult to put a value on what is improper,
but the guidance blows away the myth that you cannot even buy a coffee or
provide lunch for government officials. As the guidance makes clear, the FCPA
does not prohibit ordinary business promotion, nor what might be regarded as
common courtesies in the course of doing business,” he said.

Nicholas continued: "In some ways the guidance goes
further than might have been expected. For example, it recognises that it may
well be appropriate to pay for a business class flight for government officials
to enable them to carry out an appropriate business related function, such as a
site or product inspection or demonstration."

Large, “extravagant” gifts – however defined – cross the
line of what is acceptable as they can be considered to improperly influence
officials, he said.

“A specific example quoted in the guidance was the payment
for a trip by foreign government officials to the US
to ostensibly visit factories, when instead much of the time was spent visiting
tourist destinations such as Disney World and Niagara Falls. It is clear that there needs
to be a real and meaningful business purpose to any such trips, if the costs
are to be met by the company," he said.