An interesting development reported in the Financial Times: the United States and China have agreed to cooperate on the seizure of assets obtained through corruption, and on the deportations of Chinese nationals from the United States who engaged in bribery and corruption in China and later fled to America for sanctuary.

While the Chinese corruption crackdown, led by President Xi Jinping, is well-known and has been well-reported (the Chinese enforcement action against U.K. pharmaceutical company GlaxoSmithKline sent shock waves through Western companies doing business in China in 2013-2014), this new development may be the most significant yet for those U.S. or Western companies doing business in China that are in violation of the Foreign Corrupt Practices Act.

The United States and China do not yet have a formal extradition treaty, due in large part to U.S. concerns about the quality and fairness of the Chinese justice system where conviction rates hover somewhere around 99 percent. Now those concerns seem to have been resolved. The Chinese foreign ministry said, “The two sides agree to strengthen cooperation in the areas of corruption prevention, discovery of corruption and criminal assets, evidence exchange, attacking multinational bribery, repatriation of escaped criminals and illegal immigrants.” This increased cooperation will be conducted under the auspices of the existing U.S.-China Joint Liaison Group on Law Enforcement, which plans to meet before the end of 2015.

Initially this cooperation will be focused on Chinese nationals living in the United States, who are alleged to have received bribes prior to the current crackdown on such behavior. I think that soon, however, this cooperation may well run in two directions: At some point, the Chinese government may want information on U.S. companies that have engaged in bribery and corruption in China, similar to the conduct admitted by GSK in China when four senior GSK executives from the company’s Chinese business unit were convicted along with the corporate subsidiary. If China gets serious about prosecuting Western companies, it may well go after individuals. Something to think about—wherever you want to be, a Chinese jail is probably the last place.

The second development might be a positive reaction from the FCPA commentariat. They regularly derides the Justice Department when it fails to secure a conviction against an individual for violating the FCPA. Well, for all the ranting and railing these commentators dispense toward the Justice Department and its trial success rate—take comfort in the Chinese conviction rate, then. If you want a high conviction rate, this is what it looks like.  

Topics