China’s new anti-corruption regime is in place, and building a robust compliance programme in response to the nation’s increasingly low tolerance towards corruption is essential. Robert Clark and Zeng Jialin explain how this can be achieved
In enacting its new National Supervision Law, the central government has signalled the seriousness with which it intends to pursue allegations of corruption among state-affiliated domestic concerns. Foreign companies doing business in China will also likely be affected, while remaining under sustained pressure from their home jurisdictions to avoid involvement in corrupt activities.
In light of the recently heightened sensitivity to the risk of censure or prosecution for corruption, it is necessary to explore the nature of compliance, with particular focus on anti-bribery compliance, and the important functions it can serve for small and medium-sized enterprises (SMEs). Businesses may encounter challenges in their efforts to maintain compliance, and compliance programmes must aim to fulfil some essential goals. But if your compliance system fails to achieve its aim, or you are required to respond to an act of misfeasance committed on behalf of your company, just how should you respond?
What is compliance?
In the business context, the word “compliance” covers a wide range of substantive issues. At its core, however, the meaning is simple: Corporate management based on rules. Those rules come from a number of different sources, including national laws and regulatory requirements, policies established by international organizations, standards and practices within the industry, and a business’s own codes of conduct and ethics. They are put in place in order to further various important social aims, such as preventing bribery or money laundering, protecting the environment, fostering competitive markets, or securing intellectual property rights.
Businesses and their leaders have the responsibility of ensuring that these rules are followed. The day-to-day job of carrying out this responsibility is often delegated to a chief compliance officer or a compliance committee, tasked with overseeing all aspects of the company’s compliance efforts. Depending on the size and complexity of the organization, this may include work performed by employees within a specialized compliance department. For smaller companies, a less formally structured approach may be appropriate. In any event, the obligation is the same: to understand the applicable rules, communicate them effectively to company personnel and agents, and monitor corporate activity to minimize the risk of non-compliance.
You must be a
to read this content, please
Robert Clark is the manager of legal research at TRACE International, overseeing a team of lawyers responsible for the production of analytical content
Zeng Jialin (Jackie) is an associate at TRACE International focusing on anti-corruption legal research and due diligence on third parties headquartered in Greater China