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Issue 02 / February 2014

In this issue:

Hiring a problem: avoiding the pitfalls of employing relatives of government officials

Dealing with the middle person in Asia

Corruption scandal shakes Indonesia’s oil and gas industry

Moon cakes – guanxi or graft?

Business ethics and anti-corruption Asia Pacific insights

Financial institutionsEnergyInfrastructure, mining and commoditiesTransportTechnology and innovationLife sciences and healthcare

From the editor

I am pleased to present the February issue of Business ethics and anti-corruption: Asia Pacific insights. This review examines key anti-corruption developments in the Asia Pacific region and offers practical insights in response to topical issues.

Richard Smith, Paul Sumilas and Kate Hunter’s article on Hiring A Problem examines the risks that arise at the intersection of anti-corruption compliance and a company’s human resource function. The employment of the relatives of government officials in China had attracted the scrutiny of US enforcement authorities, and companies which seek to embed a compliant culture should consider adopting the practical measures suggested, including conducting due diligence on employees.

Following the same theme, Kayla Feld and Song Qinghua discuss the legal, cultural and linguistic rationale for the use of intermediaries in Asia – as well as the risks of exposure to the principal of legal liability for the corrupt acts of such intermediaries. The need for effective due diligence in the Asian market cannot be over-emphasised.

To illustrate the point, an intermediary who was arrested for alleged bribery was in the middle of the scandal that shook Indonesia’s oil and gas industry. Bonie Guido explores the aftermath of the turmoil that rocked SKK MIGAS.

Finally, David Lee and Clement Chui take a look at the Chinese custom of giving mooncakes and how seemingly innocuous practices can be abused for corrupt purposes. The warning remains relevant given that many of us will have just celebrated Chinese New Year, where the giving of gifts and red packets is a common occurrence.

Wilson AngPartner, SingaporeNorton Rose Fulbright (Asia) LLPTel +65 6309 [email protected]

Business ethics and anti-corruption in Asia PacificNorton Rose Fulbright advises clients across the globe on all matters relating to business ethics and anti-corruption. Within Asia Pacific, we have acted in major corruption investigations and have a track record of advising on complex, cross-border matters. We are amongst the largest international legal practices in the region. Our team operates across offices in Bangkok, Beijing, Hong Kong, Jakarta (through an associate office), Shanghai, Singapore, Tokyo, Brisbane, Canberra, Melbourne, Perth and Sydney. See also Business ethics and anti-corruption world A global bulletin published by Norton Rose Fulbright LLP

Business ethics and anti-corruption: Asia Pacific insights

Contents

Hiring a problem: avoiding the 01 pitfalls of employing relatives of government officials

Dealing with the middle person 03 in Asia

Corruption scandal shakes 06 Indonesia’s oil and gas industry

Moon cakes – guanxi or graft? 08

Hiring a problem Avoiding the pitfalls of employing relatives of government officials

Under the FCPA, hiring the relative of a non-US government official may create liability if the employment 1 is an indirect method of providing something of value to a government official with the intent to influence that government official. In general, the FCPA prohibits giving or authorising the giving of “anything of value” to a non-US government official to influence that official to assist in “obtaining or retaining business.”2

Anything of value is defined broadly for the purposes of the FCPA. Both tangible benefits (cash, gifts) and intangible benefits (employment, business opportunities) fit within the definition. Additionally, the FCPA prohibits benefits given either directly

1 See Joe Palazzolo et al., Nepotism: Is it a Crime?, Wall. St. J., Aug. 19, 2013, http://online.wsj.com/article/SB10001424127887323423804579023273864417160.html.

2 15 USC. §§ 78dd-1 to -3 (2006).

or indirectly to the government official for an improper purpose.

The US Department of Justice (‘DOJ’) and the US Securities and Exchange Commission (‘SEC’) stated in their November 2012 FCPA Guidance:

Companies ... may violate the FCPA if they give payments of gifts to third parties, like an official’s family members, as an indirect way of corruptly influencing a foreign official. For example, one defendant paid personal bills and provided airline tickets to a cousin and close friend of the foreign official whose influence the defendant sought in obtaining contracts.3

3 US Dep’t. of Justice and US Sec. & Exch. Comm’n, “A Resource Guide to the US Foreign Corrupt Practices Act” 16 (Nov. 2012), http://www.justice.gov/criminal/fraud/fcpa/guide.pdf.

Prior FCPA settlements and DOJ opinion procedure releases have dealt only tangentially with this issue, but they suggest that US authorities may consider providing employment and business opportunities to relatives of government officials to be something of value provided to the government official himself or herself under certain circumstances. While sham positions provided to relatives are clearly suspect,4 the DOJ’s settlement with Daimler Chrysler also listed internships for a Chinese government official’s son and the son’s girlfriend as one of several improper benefits provided to that government official.5

However, in some older opinion procedure releases (referred to as review procedure releases (RPR)), the DOJ has suggested that simply offering employment, payment or a business opportunity to the relative of a government official, without more, will not necessarily prompt an enforcement action.6 For example, the DOJ indicated it would not take enforcement action against a company that had hired

4 See Deferred Prosecution Agreement Statement of Facts at 7, United States v. DaimlerChrysler China Ltd., No. 1:10-CR-066 (D.D.C. Mar. 22, 2010) [hereinafter DaimlerChrysler DPA]; Deferred Prosecution Agreement Statement of Facts at 15, United States v. Tyson Foods, Inc., No. 1:11-CR-00037-RWR (D.D.C. Feb. 4, 2011).

5 Daimler Chrysler DPA at 8. There is no indication in the settlement documents that these were fictitious positions, that individuals did not perform the duties required, that the internships were specially created for them, that the individuals were unqualified for the positions, or that the compensation was not commensurate with the positions. Id.

6 Under the FCPA, companies and individuals may submit a set of facts regarding potential conduct and request that the DOJ provide an opinion as to whether that conduct confirms with the DOJ’s FCPA enforcement policy with respect to the FCPA’s anti-bribery provisions. See generally 28 C.F.R. § 80.

Global companies face many challenges in creating a thriving, profitable enterprise. For any such company, its employees are key assets in overcoming those challenges. However, recent investigations by US enforcement authorities in China have increased the focus on hiring relatives of government officials, which the US authorities may consider to be an attempt to provide improper benefits to government officials.1 While such a practice may be common, under certain circumstances, it can create an issue for companies subject to the US Foreign Corrupt Practices Act (FCPA) and other similar anti-corruption laws.

Norton Rose Fulbright – February 2014 01

Hiring a problem

and used the brother of a government official to help sell products to a foreign government.7 In that case, both the official and his brother had signed affidavits promising to comply with the FCPA.8

In another example, the DOJ indicated it would not pursue an enforcement action against a company that sought to engage a marketing representative, even though some of the representative’s principals were related to the head of state and managed the head of state’s private business affairs.9 In that case, the contract between the two companies was to include FCPA representations and warranties.10

A new hire (including interns) or third party who is related to a government official may be viewed as an anti-corruption red flag by US authorities. If the hiring is ever disclosed to or discovered by the US government, the company must be able to show that the new hire’s relationship with the government official is unrelated to improper conduct. To avoid a finding of corrupt intent, companies should conduct proper due diligence on all new hires and independent contractors, including querying them as to their relationship and affiliation with non-US government officials. If there is a relationship, companies should perform additional due diligence, to determine the role and authority of the related government official, and take the following steps:

01 | Check the educational and professional qualifications of the individual being considered for employment and ensure that they are appropriate for the position being filled. Evidence that a relative of a government official

7 RPR No. 82-04, Dep’t of Justice (Nov. 11, 1982), http://www.justice.gov/criminal/fraud/fcpa/review/1982/?r8204.pdf.

8 Id.9 RPR No. 84-01, Dep’t of Justice (Aug. 16,1984),

http://www.justice.gov/criminal/fraud/fcpa/review/1984/?r8401.pdf.

10 Id.

was hired into a position for which he or she was not qualified will likely result in a finding that they were hired for improper purposes.

02 | Ensure that the salary and treatment given to the relative of the government official is commensurate with the position and consistent with other individuals in a similar position. Evidence that the relative of the government official is receiving a salary significantly higher than other individuals at a similar level and occupying similar positions suggests the additional funds may be provided to influence the related government official.

03 | Confirm that the position was not created specifically for the relative of the government official. Evidence that the position was created for a specific person will suggest that the company’s sole purpose in hiring the individual was to gain influence with the government official.

04 | Make certain that, to the extent possible, the responsibilities of the relative of the government official do not fall in the realm of conduct over which the government official holds regulatory or other decision-making authority. For example, a relative of a government official charged with bank oversight should not be hired as the compliance officer for a bank subject to that authority. Similarly, the hiring decision-maker should be independent of the business unit that may interact with the government official.

05 | Once the individual is hired, ensure that he or she undergoes the appropriate code-of-conduct and compliance training so that the company’s anti-corruption policies and procedures are made clear to the new hire.

To mitigate the risk of a potential violation, companies should revisit their compliance and hiring policies and make certain that the policies are in harmony and provide for adequate due diligence to prevent violations of any applicable laws (including the FCPA). Additionally, companies should ensure that their recordkeeping polices provide that the relevant departments maintain the documentation necessary to refute any allegations of wrongdoing.

For more information contact:

Richard Craig SmithHead of regulatory and governmental investigations, United StatesTel+1 202 662 [email protected]

Paul Edward SumilasSenior associate, Washington DCFulbright & Jaworski LLPTel+1 202 662 [email protected]

Kate HunterAssociate, Washington DCFulbright & Jaworski LLPTel+1 202 662 [email protected]

02 Norton Rose Fulbright – February 2014



International companies investing in Asia find the use of intermediaries indispensable to the operation of their business. As companies rely heavily on intermediaries working in these foreign markets, it is important that they understand and acknowledge that these intermediaries pose a significant exposure to various risks and therefore must be carefully chosen and continuously monitored. The majority of corruption cases prosecuted by the authorities involve the use of intermediaries, in the form of agents, brokers, distributors, travel agents,

event organisers, port agents, customs brokers, etc. The intermediaries are sometimes both geographically and professionally disconnected from the company. They may be unaware of or lack incentives to comply with company policies on anti-corruption laws. They may have no obligation to report directly to the company management and have different expectations of how business ought to be done.

In this increasingly aggressive anti-corruption enforcement climate, characterised by rigorous investigation,

prosecution and assertion of extraterritorial jurisdiction, a company’s reliance on intermediaries without concurrently implementing an effective due diligence programme poses a significant risk of liability. Embroilment in a corruption scandal leads to costly reputational damage and prosecution may result in heavy fines or imprisonment and debarment from business opportunities. Reliance on agents who procure contracts on a corrupt basis leads to an erosion of corporate culture. While the giving of bribes may seem a convenient and expeditious way to conduct business in the short term, bribes are detrimental to business in the long term because they function as an additional “tax” on transactions. As employees of the company deal with agents who stoop to bribery to procure contracts for the company, such employees also become exposed to receiving kickbacks from these agents. This leads to an increasingly slippery slope.

Legal responsibility for the acts of others

The 140 countries that have signed the United Nations Convention Against Corruption (UNCAC) are required to adopt anti-corruption legislation conforming to the UNCAC’s recommendations. UNCAC attaches liability for direct and indirect bribery, which includes bribes made by third parties.

The legal, cultural, and linguistic diversity of Asia makes the use of intermediaries a virtual necessity in business transactions. In certain countries (such as China), the government may impose legal requirements that businesses and suppliers need to have licences, certificates or qualifications which it would not, as a matter of policy, grant to a foreign company. Culturally, the norm in many Asian countries is to place a strong emphasis on personal relationships. Special introductions and an intimate knowledge of local conditions are required for the success of business endeavours. The linguistic capacity of a company may also prohibit it from penetrating Asian markets without an interpreter who can communicate in the local language and discern the nuances. We show how to manage the risks posed by intermediaries in Asia through due diligence programmes geared at the Asian market.



In addition to the national laws following the UNCAC recommendations, several powerful enforcement regimes have extraterritorial jurisdiction which allow for prosecution of offences taking place in regions including Asia. In the US, the Foreign Corrupt Practices Act (FCPA) prohibits indirect bribery, and the Department of Justice (DOJ) has instigated enforcement actions in cases where the parent company had constructive knowledge of or deliberately ignored the agent’s behaviour. Similarly, the UK Bribery Act penalises the corporate organization’s “failure to prevent bribery” and attaches strict liability to the organisation for the conduct of anyone associated with the company (i.e. performing a service on behalf of the company).

Liability for actions by intermediaries

The different types of intermediary involved in the business activities of a company in Asia may be a direct source of liability for the company. The most common cases involve agents, distributors and suppliers and demonstrate the crucial importance of monitoring and conducting due diligence on intermediaries.

In one case, an American manufacturer of energy storage and power-delivery products retained a Chinese agent to secure contracts with customers in China. The company paid over US$2.5 million to this agent, which the agent then used to bribe officials at Chinese state-owned enterprises. The agent characterised the payments as an “extra amount”, “special arrangement” or “consulting fee”. The company’s books recorded the payments as expenses relating to sales commission. In 2011, the DOJ and SEC brought FCPA allegations and the company

settled for a total of US$14.3 million. In 2011, a publicly traded corporation with a head office in Calgary, Alberta pleaded guilty to offences under the Canadian Corruption of Foreign Public Officials Act and was made to pay a US$9.5 million fine.

The offences included funding the purchase of a luxurious car for the Bangladeshi Minister of Energy and Ministerial Resources through its joint venture partner in Bangladesh, as well as paying travel and accommodation expenses for the same minister.

Currently, a leading UK manufacturer of aeroplane engines is being investigated by the Serious Fraud Office (SFO) for bribes allegedly paid by its agents to Indonesian and Chinese airlines in order to persuade them to purchase its engines.

Although none of these cases involved bribes directly paid by the company, the company concerned was nevertheless liable or is being investigated for the actions of its agents and joint venture partners.

Distributors present a similar risk, demonstrating the need for companies also to monitor the actions of these parties. In one case, a sole Chinese distributor paid bribes in China of at least US$460,000 to doctors in government-owned hospitals and patent-office officials for a US medical device manufacturer. The US company was investigated by the DOJ for violations of the FCPA and ultimately settled by paying a penalty of US$2 million in 2008. Another US medical device company paid a criminal fine of US$17.3 million in its settlement with the DOJ and US$5.5 million in disgorgement of profits in 2012, after two Chinese subsidiaries had sold the company’s medical devices through a distributor

in China that provided publicly-employed doctors with money and travel in exchange for their purchases of products.

In 2013, a senior executive from a major parts supplier of a leading Japanese automotive company was arrested in Japan for violating Japan’s Unfair Competition Prevention Law. The executive was accused of offering four Chinese customs officials 16 bribes amounting in total to US$505,500. Although the automotive company has claimed no participation in the supplier’s operations, the company’s association with the supplier has inevitably tainted its reputation.

These cases show how a company sometimes cannot extricate itself from the consequences of the activities of its distributor or supplier, even if the company claims no actual participation in the wrongdoing. Thus companies must take proactive steps to mitigate the risks arising from the engagement of intermediaries by implementing an effective programme of due diligence.

Mitigating the risks

When a company engages intermediaries, it must assess any transaction for signs of bribes that may be passed on. The assessment should occur before any proposed transaction and also at intervals during the transaction.

The depth of the assessment should be based on the relationship of the company to the third party, the business formation, compensation, location, industry and process by which the relationship arose. The level of due diligence required for each transaction varies according to the risks posed. Excessive due diligence is a waste of money and may not be useful. Thus



transactions should be classified based on whether they are low, medium, or high risk. In countries where corruption risks may be lower (for example by reference to Transparency International’s Corruption Perceptions Index), companies may be justified in conducting simple due diligence into the transactions conducted there. However, in industries and regions which pose a high risk for corrupt transactions, companies should heighten their due diligence efforts.

Information gathered in the anti-bribery due diligence process may reveal transactions that are particularly risky and necessitate an in-depth inquiry and the implementation of measures including appropriate compliance safeguards. These risk indicators or “red flags” include a flawed background or reputation of an intermediary, a close relationship between the intermediary and a public official, the development of the business relationship through an interaction that is not conducted at arm’s length, disproportionate commissions or fees charged by the intermediary, unusual payment arrangements like cash payments requested by the intermediary, and compensation on the basis of success and the size of the deal rather than the work done.

A company should implement a programme to evaluate transactions for the existence of red flags, and the responsible individuals in the company should make a decision to approve or disapprove the proposed subject transaction with an intermediary. These people may need to be (at least in part) situated outside of the business department and have access to the CEO or the board of directors to ensure their independence and accountability.

If the transaction is approved despite the red flags, safeguarding measures

should be implemented to mitigate the risks. Anti-corruption provisions inserted in the transaction agreement could be helpful in ensuring that the intermediary has agreed to be in total compliance with applicable anti-bribery laws, granting a right of audit to the company to be exercised on the intermediary for compliance purposes, and allowing for immediate termination of the contract if there were to be a breach of anti-bribery undertakings.

Finally, the company should keep an accurate and complete record of the entire due diligence process, including all the information/data supplied in this process and all the transaction documents, including any payments made and invoices issued in connection with the transaction by or from the intermediary. These records demonstrate anti-bribery compliance efforts and could serve as a defence for any anti-bribery action that may be taken against the intermediary by showing that the company did not condone the giving of bribes.

Conclusion

While the engagement of third party intermediaries is inevitable in dealings in Asia, considering the applicable legal requirements imposed on a company for the acts of intermediaries and the lessons learnt from actual cases of intermediaries engaged in corrupt practices, it is critical that companies operating in Asia build an effective system of third party anti-corruption due diligence in order to mitigate the risks of its business activities in Asia.


Qinghua SongAssociate, ShanghaiNorton Rose Fulbright LLPTel +86 21 6137 [email protected]

Kayla FeldAssociate, SingaporeNorton Rose Fulbright (Asia) LLPTel +65 6309 [email protected]




Within hours of the arrest, SKKMIGAS was in turmoil. The Vice Chairman of SKKMIGAS, Johanes Widjanarko, who was in Tokyo at the time of Rubiandini’s arrest, immediately flew back to Jakarta to manage the crisis, while the Minister of Energy and Mineral Resources was called to the Presidential Palace to meet with Indonesia’s President.

The President responded by immediately issuing a decree provisionally suspending Rubiandini, asking Widjanarko to take over all his duties as SKKMIGAS Chairman.

In late August, in an interview with a national media outlet, SKKMIGAS

Secretary Gde Pradyana cited the arrest of Rubiandini and the subsequent air of uncertainty as one reason for a fall-off in oil and gas production in Indonesia (Detik Finance, 22 August 2013).

Rubiandini’s case could herald the start of a KPK investigation and “clean-up” of the oil and gas industry’s apparent web of corruption. Since his arrest, the KPK has been tracking the flow of funds received and distributed from Kernel Oil within SKKMIGAS, and has summoned members of Indonesia’s house of representatives (Dewan Perwakilan Rakyat or DPR) as well as the Minister of Energy and Mineral Resources himself for questioning in the case.

In December, the Corruption Court sentenced Tanjaya, the man alleged to have handed over the bribe to Rubiandini, to three years’ imprisonment and a fine of some US$20,000.

In Corruption Court proceedings on January 7, 2014, special prosecutor Andi Suralis accused Rubiandini of receiving money from his subordinates in January and February 2013, including SG$600,000 from Widjanarko, at that time vice chairman of SKKMIGAS; US$200,000 from Gerhard Rumesser as Deputy for Business Control; and US$150,000 from Iwan Ratman as Operation Support Division Head. The prosecution has begun unveiling a web of deceit within this organisation going far beyond the alleged misconduct of a single individual.

Rubiandini’s trial continues; he faces 20 years in prison if found guilty of violating article 12(a) of the corruption law (Law No. 31 of 1999 as amended) and articles 55 and 65 of Indonesia’s Criminal Code. He is also charged with money laundering crimes, in violation of article 3 of Law No. 8 of 2010.

In another corruption case handled by the KPK, this time involving the Hambalang Sports Centre, the KPK had vigorously pursued its investigation beyond the prosecution of a single individual. There are indications that the KPK will be similarly thorough in the SKKMIGAS case.

On 13 August 2013, the oil and gas industry in Indonesia was shaken again. Following hard on the heels of the Constitutional Court’s decision in late 2012 to disband BPMIGAS (Indonesia’s upstream oil and gas regulator responsible for handling production sharing contracts), Rudi Rubiandini, Chairman of the Oil and Gas Special Task Force (SKKMIGAS) – the institution that replaced BPMIGAS – was arrested at his home. He was arrested by Indonesia’s Corruption Eradication Commission (KPK) over a case involving gratification and potentially bribery. Rubiandini had apparently been caught red-handed accepting US$700,000 from Simon Gunawan Tanjaya, an executive of Kernel Oil, a Singapore oil trading firm.



On February 16, 2014, the KPK searched the DPR offices for several hours, looking for evidence of corruption involving parliamentarians. It was reported that this search included the server room at the DPR offices, and it appears that the KPK is considering the possible implication of politicians and lawmakers in this case.

Rubiandini’s case has sent shockwaves through the national oil and gas industry, and the KPK’s ongoing investigations may not only slow down the work of SKKMIGAS, but also cause other oil and gas industry players to become much more cautious in their business dealings with the regulator. The upheaval could mark a significant step towards a cleaner and more independent oil and gas industry in Indonesia.


Bonie GuidoSenior associate, JakartaSusandarini & Partners in association with Norton Rose Fulbright AustraliaTel +62 21 2924 [email protected]



Moon cakes – guanxi or graft?

Past enforcement action

Many would not consider a moon cake to be capable of being a bribe. However, moon cakes have been on the radar of the Independent Commission Against Corruption in Hong Kong for some time. In March 2009, a company director of a construction company was sentenced to two months in prison for offering 15 boxes of moon cakes to a team of police officers in the run up to the Mid-Autumn Festival.

Under section 8 of the Prevention of Bribery Ordinance (POBO), where a person offers an advantage to a public servant employed by a public body with which he has “dealings of any kind”, an offence may arise even where there is no corrupt intent nor any causal link between the offering of the advantage and any action of the public servant. In this case, the construction company had applied to the police for various permits to allow construction on a road in the past and would probably need to do so again in the future. This was held to be sufficient for there to be “dealings” and for the offence to have been committed.

Trends in China

Where section 8 of the POBO does not apply, the chief risk is likely to be where moon cakes of high value are given. It is not uncommon for moon cakes, which on their own are inexpensive pastries filled with lotus seed paste and salted egg yolks, to be packaged with other expensive items such as gold, watches or even cash, as gifts to others with the hope of building better relationships and encourage more favourable treatment. Such packages – sometimes referred to as “elite moon cakes” – may be considered to be attractive as a high value gift which would nevertheless appear as a moon cake on any invoice. Clearly, the risk of a perceived corrupt intent increases with value.

In China, there has been particular concern about the use of public funds to give such gifts. Accordingly, in line with the new Chinese Government’s attempt to root out corruption by both “tiger and flies” – both the senior and lower rank officials – President Xi Jinping has called for a ban on the use of public funds for such gifts, travel and other “unhealthy tendencies”.

As a result of these remarks – and the current anti-corruption climate – Government department orders in 2013 for moon cakes from high-class hotels in China were reported to have dropped by as much as 30 per cent compared to the previous year. In addition, Chinese media pointed out that “elite moon cakes” had gone low-profile, with special orders being placed and discreet production.

What should companies be thinking about?

In the current climate, what steps should companies be taking to manage their risks better? Here are some general guidelines to follow:

01 | Timing and recipients Avoid giving out moon cakes to those with whom the company is or will imminently be dealing in relation to pending applications, contracts or bids. In relation to giving out moon cakes to parties from the private sector with whom the company has an on-going relationship, attention should be paid to the amount and volume being given out (see below). With respect to the public sector, in Hong Kong, companies may (during the festive period) give out moon cakes that are within the HK$1,500 threshold (a threshold set for gifts for public officials by Hong Kong law) provided there are no official dealings between

Moon cakes – a Chinese delicacy synonymous with the Mid-Autumn Festival – are a traditional way of establishing and maintaining guanxi: a Chinese phrase which means “relationships”, an important element in conducting business in China. But when might giving moon cakes cross the line from guanxi-building to graft?



the company and the department or organisation to which the official belongs. Elsewhere in China, previous advice would be to only offer moon cakes that are within the RMB 200 threshold (a threshold set for gifts for public officials under Chinese law). However, in the current environment, best practice for companies would be to avoid giving out any moon cakes at all to public officials in China.

02 | Amount and volume If moon cakes have to be given out as a token of gratitude, make sure they are reasonably priced. If the intended recipient has a threshold for receiving gifts, ensure that the moon cakes being given out are within the price range. Companies should not give out moon cakes in disproportionate quantity to recipients (individual or a group) to avoid suspicion.

03 | Perishable gifts to share If moon cakes are to be given out together with other items, companies should ensure that they are perishable gifts like fruit baskets, chocolates or wine which could be shared amongst the office personnel. Companies should not give cash or other valuable items.

04 | Approval and policy Ensure that all moon cakes are given out with the relevant internal approvals in the company. Companies should also make it clear in its policy that any moon cakes received by its employees will be received on behalf of the company and shared amongst the employees.

05 | Accurate record keeping Keep accurate records of moon cakes and gifts to ensure transparency in the process. These records should include:

— date of giving the moon cakes and name of the person responsible

— value and a detailed description of the moon cakes given

— details of the recipient (including the name, title and company)

— accurate documentation supporting the request (evidence of the relevant approvals).


David LeePartner, Hong KongNorton Rose Fulbright Hong KongTel +852 3405 [email protected]

Clement Chui Associate, Hong KongNorton Rose Fulbright Hong KongTel +852 3405 [email protected]


Moon cakes – 'guanxi' or graft?

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Contacts

If you would like further information please contact:

AustraliaLindsay Houghton SydneyNorton Rose Fulbright AustraliaTel +61 2 9330 [email protected]

Abigail McGregorMelbourneNorton Rose Fulbright AustraliaTel +61 3 8686 6632 [email protected]

ChinaHong SunShanghaiNorton Rose Fulbright LLPTel +86 21 6137 [email protected]

Jing WangBeijingNorton Rose Fulbright LLPTel +86 (10) 6535 [email protected]

Hong KongDavid Lee Hong KongNorton Rose Fulbright Hong KongTel +852 3405 [email protected]

SingaporeWilson Ang SingaporeNorton Rose Fulbright (Asia) LLPTel +65 6309 [email protected]

IndonesiaSusandariniJakartaSusandarini & Partners in Association with Norton Rose Fulbright AustraliaTel +62 21 2924 [email protected]

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