At a press conference held in Shanghai on July 15, 2007, TRACE released the first country-specific BRIBEline report. BRIBEline (www.bribeline.org) is a multi-lingual website through which companies and individuals can anonymously report bribe demands by ministry or sector. The site is managed by TRACE International, Inc., a Maryland-based non-profit membership organization dedicated to anti-bribery compliance.

The report focused on the 148 anonymous bribe demands that were reported in China between July 1, 2007 and June 30, 2008. The overwhelming majority (85 percent) of those reported demands were requested by individuals affiliated with the Chinese government, including police (at 11 percent), the judiciary (also at 11 percent), and other government officials. That police and the judiciary—the bedrock of a nation’s justice system—make up 22 percent of the reported bribe demands is an especially disturbing statistic. At a minimum, companies doing business in China should consider adopting arbitration policies in order to avoid exposure to a corrupt judiciary.

The majority of bribe demands reported were either to avoid harm or to secure a benefit to which the person or entity was already entitled. Fewer of the demands reported were to gain a business advantage. The stereotypical cash-for-business exchange was in the minority. While bribery has long been associated with doing business in China and many companies have worked to address the compliance risks associated with commercial bribery, companies may be less prepared to deal with these extortionate demands. What if your mail carrier threatens to stop delivering mail to your office building? All shipments through customs grind to a halt? The police start towing your employees’ cars? Companies need to carefully evaluate their policies to make sure they are prepared to respond to bribe demands in a way that doesn’t run afoul of the FCPA.

Reports submitted to BRIBEline over the last 12 months indicate that companies doing business in China should be prepared to deal with bribe demands exceeding US$500,000 from individuals affiliated with the Chinese government.

The size and frequency of reported bribe demands in China were surprising. Of the 117 reports that specified a monetary range for the bribe demand, less than half were for small amounts of $1,000 or less, while a full six percent were for more than $500,000. Nearly three-quarters of the 148 individuals reporting a bribe said they had been asked for bribes more than once. Almost one-fifth of those individuals reported that they had been asked for bribes more than 100 times. This underscores the importance of companies ensuring that their China-based employees are well-trained on tactics to firmly reject bribe demands, as they may otherwise become entangled in a cycle of repeated, high-value demands.

TRACE developed BRIBEline to help companies tailor risk mitigation tools to the sorts of demands with which their employees are faced. Companies with operations in China can review the surprising results of BRIBEline’s first year at www.TRACEinternational.org/news/BRIBElineData.asp.