Amid an intensive one-year nationwide campaign by the National Health Commission and other departments to uproot corruption in the healthcare sector, the Central Commission for Discipline Inspection and the National Supervision Commission underline an intention to “insist on punishing both bribe takers and givers, and intensify efforts to investigate and handle a number of pharmaceutical corruption cases”.
In addition to hospital directors and secretaries, a number of pharmaceutical companies and related personnel have been investigated for commercial bribery. Consequences for these companies are nothing to scoff at. Pharmaceutical companies involved in commercial bribery cases should therefore focus on how to mount effectively a defence to strive for the best possible results to the extent permitted by law.
‘Plea of not guilty’ or ‘plea of leniency’? In commercial bribery cases involving pharmaceutical companies, the first thing to consider is the objective of the overall defence. A choice must be made between a “plea of innocence” and “plea of leniency”, while fully weighing the pros and cons of each.
If pleading not guilty, the defence should consider how to establish that the company’s conduct does not constitute an offence, and prove it with evidence at hand. At the same time, it is also necessary to take into account that if the plea of innocence is not accepted, the court will not only accept the procuratorial authority’s allegations entirely, but also refuse to mitigate punishment because the company did not admit its guilt.
If pleading leniency, the key is to fully explore the statutory and discretionary mitigating circumstances of the company, and communicate sufficiently with the prosecutor and judge so they can fully adopt defence opinions, thus securing a penalty most favourable for the company. However, a plea of leniency also means it is almost impossible for the company to “escape unscathed”.
Strategies for ‘plea of innocence’. From a procedural point of view for pharmaceutical firms suspected of commercial bribery, a plea of innocence should not only be raised during the court session, but should run through the entire criminal litigation process.
In the examination and prosecution stage, detailed defence opinions should be put forward to the prosecutor. If a not guilty opinion is adopted, the procuratorial authority may make a decision of absolute non-prosecution.
From a substantive point of view, there are two specific grounds for a plea of innocence. First, it is not appropriate to identify the company’s conduct as bribery. Due to its special nature, the healthcare sector requires necessary commercial marketing. However, there are certain ambiguities between reasonable sales expenditure and commercial bribery. The conduct of pharmaceutical companies in purchasing and selling cannot be simply equated with committing a crime.
Take “welfare” conference sponsorship as an example. If the academic conference is authentic – and not used as a cover-up for the transfer of unlawful interests – then the sponsorship of pharmaceutical companies should not be considered a crime.
Second, if the company has built a complete criminal compliance system against commercial bribery before the case – clarifying the types of employee conduct that would constitute commercial bribery through a series of code of conduct and operational standards, drawing a clear red line, and creating a firewall between corporate crime and personal crime – then the personal bribery of employees should not be regarded as the corporate liability.
This also effectively avoids attributing the employee’s personal conduct to the company, which also serves as effective proof for the plea of the company’s innocence.
Another matter that warrants consideration is whether the company should plead not guilty in all cases. Without admitting guilt, the company loses all chances of statutory leniency towards voluntary surrender and confession in sentencing. On the other hand, if it does admit guilt, the guilty statement will become strong evidence of the alleged offence.
At this point, considering the specific circumstances of each case and following the spirit of the Reply of the Supreme People’s Court on Issues Concerning Whether the Allegations of a Company on the Nature of Its Acts Will Influence the Formation of Voluntary Surrender, as long as the main facts are confessed in an honest manner, the mere belief that the conduct does not constitute a crime – which acts as defence of the conduct’s nature – does not affect the formation of voluntary surrender.
Strategies for ‘plea of leniency’. From a procedural point of view, if a pharmaceutical company did engage in commercial bribery, it should plead guilty to the offence in a timely manner. According to the Guiding Opinions on the Application of the Leniency System for Admitting Guilt and Accepting Punishment, the defence should actively communicate with the prosecutor and engage in sentencing negotiations, so the company can secure the most favourable penalties.
In particular, pharmaceutical firms should develop feasible compliance management norms and build effective compliance organisational systems regarding internal problems closely relating to commercial bribery, and strive for compliance non-prosecution from procuratorial authorities through a series of compliance efforts.
From a substantive point of view, there are two specific grounds for plea of leniency. First, comprehensively collect statutory and discretionary mitigating circumstances of the pharmaceutical company, such as voluntary surrender, confession, active return of illegally obtained money, first-time and casual offences.
Second, the plea of leniency should be entered along with certain facts of the case, such as: whether a part of the money should not be attributed to bribery and should therefore be excluded; whether the identification of the main culprits in a joint offence is appropriate; and whether the scope of accountable persons for criminal liability is too broad.
Cao Li is a senior counsel at Anli Partners