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Major commercial bribery cases of multinationals in China
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09:56, August 06, 2009

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A report published by China Youth Daily on August 4 has attracted widespread attention from media. The research report from Anbound Group, a domestic private economic analysis company, revealed that the number of commercial bribery cases involving multinational corporations has continued to rise. China has investigated at least 500,000 corruption cases over the past decade, 64 percent of which involved international trade and foreign businesses.

The Walmart case: In December 2003, in the course of submitting a project application to the Yunnan Provincial Bureau of Foreign Trade and Economic Cooperation for review and approval, Kunming Walmart Management Service Company arranged a shopping tour for the wife of Peng Muyu, Director and Party Secretary of the bureau, in Hong Kong and paid 100,000 yuan shopping expenses. Peng got a 10-year prison sentence when the case was exposed.

The Lucent Case: In April 2004, it was revealed that over the preceding three years, Lucent Technologies funded nearly 1,000 Chinese government officials and senior officers at Chinese telecommunication operators to "visit" the US, and arranged their itineraries to include Hawaii, Las Vegas, the Grand Canyon, Disneyland and New York under the cover of "factory visits and training." This cost Lucent over 10 million USD. After the exposure of the case, the US Department of Justice and the US Securities and Exchange Commission (SEC) fined Lucent a massive 2.5 million USD.

The Diagnostic Products Corporation (DPC) case: In May 2005, DPC, the world's largest manufacturer of medical diagnostic facilities, disclosed that its subsidiary in Tianjin had offered bribes totaling 1.623 million USD to doctors at China's state-owned hospitals over the previous 11 years starting from 1991, in order to persuade the hospitals to purchase DPC's products. DPC made two million USD in profits through the bribes. Eventually, the company was fined 4.79 million USD by US authorities for violating the "US Foreign Corrupt Practices Act."

The IBM case: In November 2006, the Beijing First Intermediate People's Court announced that from 2002 through 2003, IBM's senior officers met with Zhang Enzhao, former chairman of the China Construction Bank, several times through the arrangement of a middleman. This contravenes China's principles and procedures for financial activities involving foreign affairs. As repayment, IBM deposited 225,000 USD of "service fees" into the HSBC Hong Kong account of the middleman who in turn transferred the money to Zhang.

The Carrefour case: In August 2007, French retail giant Carrefour's China head office issued a notice stating that eight managers in its Beijing division were detained by the local police for allegedly accepting bribes from suppliers. The total sum of the bribes involved in this case exceeded one million yuan.

The Siemens case: At the end of 2008, German telecommunications giant Siemens agreed to pay about 1.3 billion USD in fines to end a bribery case that had plagued it for two years, setting a historical record in terms of the sum of a fine paid for a commercial bribery case. From 2003 to 2007, Siemens offered bribes of 23.4 million USD to China's five state-owned hospitals, and bribed Chinese government officials to secure a subway project worth one billion USD as well as two high-voltage power transmission line projects worth a total of around 838 million USD in south China.

The Morgan Stanley case: In February 2009, Morgan Stanley submitted a filing to the SEC admitting that it had discovered that an employee from its real estate subsidiary in China may have violated the "US Foreign Corrupt Practices Act." It later announced that two senior officers from its real estate subsidiary in China had stepped down from their positions. The alleged bribe takers involved in the case are currently under investigation.

By People's Daily Online

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