August 24,2009

CCI Bribery Case: Sino-US Cooperation Would Be a Strong Anti-Corruption Weapon

By CSC staff, Shanghai

Chinese state-owned enterprises (SOEs) named in the US bribery case of California-based Control Components Inc (CCI) are conducting their own investigations into the conduct of their staffs, and the State-owned Assets Supervision and Administration Commission (SASAC) claims also to be investigating the issue. This is far from enough. China's judicial departments should take the initiative and join with US judicial authorities to cooperate against corruption.


On July 31, CCI admitted that on 236 occasions it had bribed officials and employees from state-owned and private enterprises in 36 countries, and would pay fines of $18.2 million. According to US Justice Department documents, Chinese firms involved in the bribery case include such heavyweights as China National Petroleum, China Petroleum Material & Equipment Corporation, Dongfang Electric Corporation, CNOOC, and China Resources Power.


SASAC has set up a special team to look into the issue, and is closely monitoring its progress. Some of the companies involved have announced that they are conducting their own in-house investigations, though as yet no company has uncovered any bribery of its own employees.


Meanwhile, Chinese lawyers are suggesting that China's judicial authorities should intervene. Zhang Wei, a lawyer from Shanghai Runhua Law Firm, says that corporate self-investigation has no legal standing, but results of judicial departments with public rights have legal force. The judiciary has the power to investigate personal bank accounts, current accounts and consumption, while companies have access to little personal information except employees wage cards. Judicial investigations are going to be more thorough and rigorous.


They would also be more convincing. The results of company and SASAC investigations so far have led only to conclusions of the innocence of their employees, even in the face of the conviction and admissions of CCI in a US court. Criminal investigations by the judiciary would likely carry more weight.


Some lawyers have recommended that Chinese officers should not only be involved in CCI corruption case, but should join hands with US authorities. Chinese judicial organs can request US aid through the "Sino-US Mutual Legal Assistance Agreement." The Chinese government would first make a request of the US Embassy or a consulate, which then would turn to Justice Department for assistance. This is a least-cost way, and there exists no problem in this case for US officials to assist the Chinese side.


Some of the named Chinese enterprises have already contacted IMI, CCI's parent company, and the Justice Department. Wang Xiaobin, the finance director of China Resources Power (CRP), said CRP spoke with IMI's China headquarters in July, requesting all relevant information concerning CRP, including contracts and vouchers of commission payments, etc., and CRP had also made contact with the Department of Justice.


CNOOC has aslo contacted IMI and CCI and conducted its own investigation. CNOOC has received a reply from IMI president, saying the recipients of "bribe" money were likely not CNOOC employees.


Runhua's Zhang Wei believes that Chinese and US judicial authorities should join hands. "First of all, the US judiciary is more familiar with the case, and it is necessary for the Chinese judiciary to know more about the case and obtain more authoritative information through the US side. Second, Americans are involved, and in the future more Chinese and Americans may also be involved. The official co-ordination of investigations will help get to the bottom of the case."


At present, the company CCI has pleaded guilty, but the trial of CCI's executives has not yet begun, so the case is not over. Gao Zhikai, director of the China Association of International Relations and vice-president in charge of CNOOC legal affairs, said stronger international judicial cooperation would be a great weapon in the fight against corruption, and that the CCI case provides opportunities for China to create stronger bonds or international judicial co-operation.


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