China Matters

China Matters: The Chinese Puzzle Box: the Conundrum of Distinguishing a Permissible Gift from an Illegal Bribe

June 09, 2010

Lesli Ligorner & Barbara Tsai

With recent headlines proclaiming stringent enforcement of the U.S. Foreign Corrupt Practices Act (FCPA) by the U.S. government, companies covered by the FCPA can no longer afford to maintain an attitude of business as usual in China. The FCPA prohibits U.S. companies and companies listed or having sponsored ADRs on U.S. stock exchanges from corruptly offering or providing anything of value to a foreign government official including employees of state-owned entities (SOEs) for the purpose of obtaining or retaining business. U.S. companies doing business in China are often faced with the conundrum of deciding whether a gift is a permissible business courtesy or whether it has crossed the fine line into being an illegal bribe.

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