Evolution of international and Chinese anti-bribery and corruption compliance programs

• Pages: 437-451
• Date: 06 June 2016
• DOI: https://doi.org/10.1108/CG-07-2015-0097
• Published date: 06 June 2016
• Author: Karen Schonfelder,S. Ramakrishna Velamuri,Wilson Liu
• Subject Matter: Strategy,Corporate governance

Evolution of international and Chinese

anti-bribery and corruption compliance

programs

Karen Schonfelder, S. Ramakrishna Velamuri and Wilson Liu

Karen Schonfelder is an

Ethics and Compliance

professional based in

Calgary, Canada.

S. Ramakrishna Velamuri

is Professor at the

Department of Strategy

and Entrepreneurship,

China Europe

International Business

School, Shanghai, China.

Wilson Liu is Research

Assistant at the China

Europe International

Business School,

Shanghai, China.

Abstract

Purpose –The purpose of this study is to explore the regulatory framework in China and the extent to

which Chinese multinationals have implemented and disclosed their anti-bribery and corruption (ABC)

compliance practices. This is done against the backdrop of the evolving international ABC compliance

standards.

Design/methodology/approach –This study is based on detailed reviews of the ABC compliance

standards of international organizations; legislation passed by the USA, the UK and Chinese

Governments; seven semi-structured interviews with leading experts in the field; and comparisons of

ABC program disclosures of four Chinese with four best-in-class western multinational corporations.

Findings –A high level of convergence was found in the ABC standards published by the international

organizations. Several positive features were found in the Chinese ABC regulatory frameworks but our

findings indicate that there is minimal disclosure around ABC compliance program practices. This

paper shows that a transparent disclosure would represent an easy win for Chinese multinational

corporations and contribute to raising their reputations internationally.

Research limitations/implications –While there are numerous studies in the law literature on ABC

compliance standards and the extent to which they are effective in achieving their objectives, this is an

emergent area in management research, to which our study makes a contribution. Future research

could explore how other emerging economies are tackling this important issue.

Practical implications –By proactively adopting ABC compliance practices, corporations can seize

the ethical high ground and build solid reputations with their stakeholders.

Originality/value –It is believed that this study is the first academic study that compares Chinese and

international ABC standards.

Keywords Corporate governance, Corruption, Risk management, Code of conducts,

Corporate ethics

Paper type General review

1. Introduction

The number of corruption investigations involving multinational corporations (MNCs) has

increased significantly over the past several years (Figure 1). Costly regulatory fines,

placement of compliance monitors within a company’s operations and other debilitating

sanctions have had significant operational and reputational implications on the

organizations at fault. The Siemens bribery scandal led the company in 2008 to agree to

US$1.6bn in legal settlements to the US and European authorities, and required the new

CEO to replace 80 per cent of the top-tier, 70 per cent of the second-tier and 40 per cent

of the third-tier executives (Watson, 2013). These penalties have no doubt inspired other

commercial establishments to take action, motivating them to raise their own standards for

business conduct.

Over the past three decades, the business case for preserving a company’s reputation has

been enhanced due to the creation of numerous anti-bribery and corruption (ABC) laws

and conventions. While commercial enterprises invest significant resources in

implementing these programs, there continues to be uncertainty as to the operational

Received 18 July 2015

Revised 9 February 2016

Accepted 10 February 2016

This paper is based on the

Master’s thesis of the first

author, when she was a

participant of the Masters

Program in Anti-Corruption

Studies (MACS) of the

International Anti-Corruption

Academy (IACA), Laxenburg,

Austria. The second author

acted as the thesis advisor.

The authors would like to

acknowledge the feedback

received from the faculty and

participants of the MACS

program at IACA, as well as

the generous research support

received from the China

Europe International Business

School (CEIBS).

DOI 10.1108/CG-07-2015-0097 VOL. 16 NO. 3 2016, pp. 437-451, © Emerald Group Publishing Limited, ISSN 1472-0701 CORPORATE GOVERNANCE PAGE 437