The Standing Committee of the National People’s Congress, on 26 October 2018, passed the revised PRC Criminal Procedure Law (CPL), which introduces, among other things, the “default judgment” and “immediate judgment” procedures in criminal trials.
The default judgment procedure penalizes defendants who have absconded overseas in respect of bribery and corruption offences as well as activities that severely endanger national security (e.g., terrorist activities). The immediate judgment procedure expedites prosecution of defendants who plead guilty and accept penalty proposals. These are significant developments that enhance anti-bribery enforcement by the Chinese authorities and impose greater deterrence to bribery and corruption offences. They also echo global anti-corruption trends and reflect the continuous escalation of China’s anti-corruption campaign.
What it means for companies in China? Tracking down corrupt officials who have escaped overseas is an important component of China’s current anti-corruption enforcement regime. The new default judgment procedure provides a more powerful means for Chinese enforcement bodies to track down and recover illegal gains from such bribe recipients.
Although the primary purpose of the CPL reform is to strengthen the government’s fight against official bribery, the new procedures potentially apply to all suspects involved in corruption and bribery-related crimes under PRC law, regardless of their nationality and even if they are outside of China at the time of prosecution. Companies and employees doing business in China need to remain vigilant as they can still be implicated if involved in bribery-related activities. For example, PRC authorities may discover sources of alleged bribes and the identity of bribe givers during investigations against government officials or state-owned enterprises. Such information may also be disclosed in court during the relevant default judgment hearing. This may have serious consequences for companies and their employees.
Meanwhile, the immediate judgment procedure expedites the prosecution process. This reflects efforts by the Chinese authorities in facilitating litigation efficiency as part of the on-going judicial system reform in China. We expect to see an increased number of speedy trials for clear-cut corruption and bribery cases.
The revised CPL also codifies leniency rules in criminal cases and affirms the existing quasi-plea bargaining practice. This should encourage individual or corporate suspects to cooperate in government investigations or voluntarily confess in exchange for lesser charges or the possibility of non-prosecution. Under the current enforcement environment, companies doing business in China should regularly monitor employee compliance with anti-bribery and corruption policies and procedures, and conduct credible and timely investigations if wrongdoing is suspected. This will allow a company to properly evaluate and mitigate potential risk exposures and facilitate opportunities to seek leniency.
Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Danian Zhang (Shanghai) at firstname.lastname@example.org