1. New laws or regulations

State level: No developments.

Local level (Beijing & Shanghai): No developments.

Communist Party Rules: No developments.

2. Upcoming laws or regulations

No developments.

3. Government Action

(1) On February 17, 2016, Zhou Peifang (“Zhou”), the former Director of Beijing Haidian District Municipal Garden Service Center and Haidian District Municipal Commission of City Administration and Environment, was sentenced to life imprisonment for taking bribes totaling RMB 17 million (USD 2.59 million) by the Beijing Higher People’s Court, with all his personal property confiscated as well as illegal gains disgorged.

The court found that during Zhou’s term in office from February 2004 to 2009, he illegally aided three companies in winning construction projects as well as settling project payments and accepting bribes while offering to help them by taking advantage of his position. The bribes were mostly given under the guise of lending. Zhou was sentenced to life sentence during his first trial in 2015, and Beijing Higher People’s Court affirmed that original judgment.

(2) It was reported on February 19, 2016 that Ding Yong (“Ding”), the former Deputy Inspector of Zhejiang National Development and Reform Commission, was sentenced to 12 years’ imprisonment for accepting bribes including RMB 9.938 million (USD 1.517 million), USD 40,000 and HKD 70,000 (USD 9,006) by the Intermediate People’s Court of Shaoxing City, Zhejiang Province, with all his personal property valued at RMB 1 million (USD 152,649) confiscated.

The court has found that during his service term from 2002 and 2014, Ding illegally sought personal gains while approving projects for the underwriting and issuance of corporate bonds by taking advantage of his position. He was given a lighter sentence due to his voluntary confession and refund of illegal gains.

(3) It was reported that on February 21, 2016 Song Jianguo (“Song”), the former Director of the Public Security and Traffic Management Bureau of Beijing, was sentenced to life imprisonment for taking bribes by Beijing Higher People’s court, with all his personal property confiscated and his political rights deprived. The original sentence was made by Beijing No. 1 Intermediate People’s Court in November 2015.

Song was found guilty of offering legal representatives and other persons in charge of several companies help in applying for vehicle plates by taking advantage of his position and accepting bribes totaling about RMB 23.9 million (USD 3.64 million). His two drivers, one secretary, and his son also sought illegal benefits in vehicle plates and project awards under his cover, and they have been sentenced separately. In addition, Song bought two apartments in Beijing for his mistress, each with a purchase price below market value, which was deemed manifestly unreasonable, and also accepted two shops valued at RMB 4.86 million (USD 741,877). Lastly, he received kickbacks amounting to RMB 15.3 million (USD 2.33 million) from a gallery after introducing customers to them.

(4) On February 26, 2016, Xu Long (“Xu”), the former Chairman of China Mobile Group Guangdong Company Limited, a state-owned company, was sentenced to life in prison for taking bribes by the Intermediate People’s Court of Guangzhou City, Guangdong Province, with his personal property valued RMB 7 million (USD 1.06 million) confiscated.

Xu was found guilty of accepting bribes including RMB 13.49 million (USD 2.05 million), HKD 2 million (USD 257,315), USD 30,000 and GBP 10,000 (USD 13,856). In exchange, Xu sought illegal benefits for bribe-givers in job promotion, equipment purchase, etc. Xu said that he would appeal to a higher court.

4. Others

None.

5. China-related FCPA Action

(1) On February 4, SciClone Pharmaceuticals (“SciClone”), a pharmaceutical company based in California, agreed to pay over USD 12 million fined by the Securities and Exchange Commission (“SEC”) to settle charges of its violation of the Foreign Corrupt Practices Act (“FCPA”) in relation to anti-bribery, internal controls, and books-and-records provisions including USD 9.426 million in disgorgement of profits, USD 900,000 in prejudgment interest and USD 2.5 million of penalty, and agreed to provide status reports to the SEC in the following three years regarding its remediation and implementation of anti-corruption compliance measures.

China is the major market of SciClone. According to an investigation by the SEC, while engaging distributors in China, SciClone markets and sells its products in China through its international subsidiaries. Employees of SciClone provided money, gifts and other things of value to healthcare professionals hired by state-owned hospitals in China to promote the sales of SciClone’s products, which were all known to the management of SciClone. SciClone also incorrectly recorded such payment as legitimate business expenses, such as sponsorships, conferences, etc., and failed to maintain a sufficient internal accounting control system.

(2) On February 16, 2016, PTC Incorporated, a Massachusetts-based technology company (“PTC”), and its Chinese subsidiaries agreed to pay more than USD 28 million in fines to settle the charges by the SEC to settle parallel civil and criminal actions involving violations of the FCPA of internal controls as well as books and records provisions, among which PTC will pay USD 11.858 million in disgorgement and USD 1.764 million in prejudgment interest to the SEC, while its Chinese subsidiaries will pay USD 14. 54 million fines to the Department of Justice.

The SEC found that from at least 2006 to 2011, two Chinese subsidiaries of PTC provided improper payments such as travel, gifts and entertainment to Chinese government officials of state-owned entities that were PTC customers and the total payment was up to USD 1.5 million, from which PRC gained profits of USD 11.8 million. PTC was also found have disguised such payment as legitimate business expenses or commissions.

The SEC also announced its first deferred prosecution agreement (DPA) with an individual in an FCPA case, Yu Kai Yuan, a former employee of one of PTC’s Chinese subsidiaries, as he has provided significant cooperation during investigation.