The Chinese crackdown on bribery continues, and judging by the government’s most recent arrest warrant, not even former governmental officials are safe.
On August 11, the Shanghai prosecutor’s office announced that it had approved the arrest of Wang Zongnan for suspected bribery and embezzlement. Wang, a former Communist Party official, was the head of leading Chinese food group Bright Food Group Co. before retiring in 2013 at the age of 59.
Bright Food is best known as a dairy producer and retailer in China. Under Wang, the company took on a number of acquisitions, including purchasing British cereal maker Weetabix for $1.9 billion in 2012.
However, according to the Wall Street Journal it may be an older job that brings down Wang. Before Bright Food, he worked as executive with Shanghai Friendship Group Co., a company that controls many major Chinese retail brands. A prosecutor statement announcing the probe in late July alleged that the main focus of the investigation would be Wang’s time at Friendship, and specifically the Lianhua retail store brand.
Wang is just one of multiple top-level executives to have been snared in the Chinese government’s recent bribery probes. In late July, the government announced that it would be specifically examining corruption within Shanghai.
Of course, this crackdown falls in line with Chinese Premier Li Keqiang’s stated goals in early 2014. In a February statement, Li said that the enforcement of new anti-corruption laws is one of his administration’s key goals.
“Openness is the most powerful anticorruption measure,” Li said. He also added that the key to achieving this goal is better standardized processes that leave little room for interpretation or bribery.
In-house counsel should not assume that multinational companies doing business in China are immune to governmental pressure. In January, the Mead Johnson Nutrition Co. announced that it would be paying U.S. penalties for violations of the Foreign Corrupt Practices Act after illegal dealings with the Chinese government.