On April 17, 2017 Monday, we hosted a closed-door workshop on the subject of management of risk on outbound and inbound bribery as well as some other internal frauds such as embezzlement, conflict of interest, etc.  The participants include compliance officers and professionals, a senior official from the Investigation Squad of Shanghai Administration for Industry and Commerce, and a senior police officer.

For the purpose of the discussion, outbound bribery is categorized as compliance bribery while inbound bribery is categorized as fraud risk.  Some other items that are categorized as fraud risk include, embezzlement, conflict of interest, self-dealing and the like.

The workshop witnessed an in-depth discussion on the following questions:

1.        Would an FCPA investigation result in a domestic administrative or criminal investigation within China?

2.        Anticompetitive bribery v. corruptive bribery: where and how to draw a line apropos the regulatory and the management perspective?

3.        Is it true that a compliance bird eats nothing? If not, why not; if yes, how to cope with it?

4.        How to market effectively with institutional clients (especially SOEs or State-owned hospitals) keeping in compliance with the law?

5.        If your competitor violates anti-bribery law, would you blow the whistle on it before the governmental agencies?

6.        How to have trainings effectively? And what are the other key measures to manage the compliance risks?

7.        How do you view the risk of fraud (inbound bribery, conflict of interest, embezzlement, etc.) in your industry? Is it more rampant in comparison to the risk of compliance?

8.        How to effectively detect fraud risks, considering the risk of fraud is difficult to detect?

9.        Would you leverage the police investigations to go after internal fraudsters? If so, how?

10.     Should the police tear up a company and mess it up when investigating an internal fraudster?

For the 10 questions, the meeting lasted more than three hours.  For some questions, there are no clear answers, for example, how to deal with the dilemma that a compliance bird eats nothing.  It seems to be a phenomenon that multinational companies would give up some business opportunities to make sure there is no violation or non-compliance of anti-bribery law, but there is a lot to do to make their businesses less under-competitive or more promising, about which you may also read the Report on Corporate Compliance Management in China (2016).

*The author Henry Chen, a Senior Partner of Dentons Shanghai Office, is licensed to practice law in China and the New York State of the U.S.  Before joining Dentons, Henry worked in Ford as its AP Compliance Director.  Henry Chen is a representative of China Delegation to negotiate over ISO19600 Compliance Management System - Guidelines, and the Vice Director of the Working Committee on China national standard Compliance Management System.  Henry Chen is the author of the book Commercial Bribery Risk Management in China.  You may also visit Henry's column "Competition & Monopoly" maintained with Caixin Media.  Henry is available at henry.chen@dentons.cn