Asia's Largest Oil Refiner, Sinopec, Claims Daimler Paid Bribes

In an interesting use of the Foreign Corrupt Practices Act (FCPA), China Petroleum & Chemical Corporation (Sinopec), a state run refinery group, claims that Daimler AG paid bribes to one of its staff. An interesting move for a company that could be potentially liable for soliciting bribes if charges were filed in the US.


As the article below notes, this was part of a wider investigation of bribery charges against Daimler by the United States Department of Justice. Potentially, US prosecutors may have discovered the bribery occurring between Daimler and Sinopec, and may have threatened charges against Sinopec if they were to refuse to cooperate (assuming, of course, that Sinopec has assets in the United States which could be used as the basis of a judgment). If that were true, then it would be logical that Sinopec would come forward and give the appearance that they "urged the government to tighten oversight" on this sort of action. As the story is presented below, China prosecuted the responsible individuals and proceeded to complain about US efforts to police foreign corruption.


In any event, there would be no way to know for sure unless one had access to the prosecutor's file. This also could be a political posturing move, a continuation of the strained relations between the US and China. Or it could be a diversion from the bad publicity China has received lately regarding human rights, censorship, Google, and Tibet. Hopefully details of what exactly happened will come out.

Here is a portion of the AP story presented at ABC: 

"China Petroleum & Chemical Corp., Asia's biggest refiner, Friday acknowledged allegations that German automaker Daimler AG had paid bribes to one of its staff, and urged the government to tighten oversight of lawbreaking foreign companies.

The case is part of a wider one in which Daimler is accused of paying tens of millions of dollars in bribes through subsidiaries to officials of at least 22 foreign governments, including China.

Prosecutors say the payments violated the U.S. Foreign Corrupt Practices Act, which prohibits improper payments to officials of other countries.

It comes as four employees of Anglo-Australian mining giant Rio Tinto await a verdict from a Shanghai court in a bribery and commercial secrets case that has highlighted China's handling of corruption charges against foreign companies.

In a statement on its Web site, the Beijing-based refiner, better known as Sinopec, said the employee, which it identified only by the surname 'Du,' was convicted and sentenced by a Beijing court in 2006 from crimes committed in 2002-2003. It gave no further details.

After the case arose, the state-owned company severed its business relations with Daimler, corrected any problems and moved to strengthen its anticorruption measures, it said.

'We urge and hope that the government will encourage a normal market environment and good business conduct by working to severely punish audacious challenges from multinational companies and lawbreaking business people,' the statement says.

According to court documents, Daimler employees allegedly paid 4.17 million euros ($5.6 million) in improper payments such as kickbacks of cash and gifts to help fix contracts for purchases of hundreds of millions of dollars worth of Daimler vehicles."


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