China’s anticorruption campaign has focused almost exclusively on the so-called “demand side” of bribe transactions—the public officials who request or accept bribe payments. Indeed, it is quite common for a bribe-taking government official to be prosecuted while the bribe giver receives no punishment at all (see here, here, and here). Overall, China has convicted and punished almost four times as many bribe-takers as bribe-givers, and only 1% of bribe-givers have faced criminal prosecution.
This lopsided emphasis on the demand side of bribery is mostly caused by a odd asymmetry in China’s Criminal Law. According to Article 390, bribe givers who confess their crimes to the authorities before the case is handed over the procuratorate office for criminal prosecution are eligible for leniency, including outright exemption from punishment, but there is no equivalent provision for bribe takers. (There are some general provisions in Chinese criminal law that afford criminal defendants mitigated punishment, but these sections are applicable only when suspects voluntarily turn themselves in before any investigation has commenced, or provide sufficiently valuable service in uncovering other criminal misconduct. These provisions are not as generous as Article 390.) Due to the asymmetric structure of Article 390, coupled with the fact that bribery is often hard to uncover without the cooperation of one of the parties involved in the transaction, China’s principal anticorruption agency, the Central Commission for Discipline Inspection (CCDI), has cut deals almost exclusively with bribe givers, offering them immunity pursuant to Article 390 in exchange for their assistance in going after the corrupt officials.
This asymmetry has contributed to criticism that China is too lenient on bribe givers. Some critics have argued that China should eliminate the disparate treatment of bribe givers and bribe takers by abolishing Article 390 altogether, thus making it equally difficult for bribe givers and bribe takers to receive leniency (see, for example, here and here). While China has not gone that far, it has taken steps in this direction, for example by amending Article 390 back in 2015 to narrow the set of bribe givers who would be eligible to receive mitigated punishment under that section.
I agree that the asymmetric treatment of bribe givers and bribe takers makes little sense, but rectifying that asymmetry by restricting the availability of leniency to bribe givers who voluntarily confess is the wrong approach. On the contrary, China should expand Article 390 so that bribe takers who report to the government and offer evidence against the bribe payer would be eligible for leniency. But only the party that reports first (and fully and candidly) should be eligible for leniency—the other party to the transaction would be punished harshly. This system, which would resemble the US Department of Justice’s Antitrust Leniency Program, creates a prisoner’s dilemma problem for both parties to the bribe transaction, thus helping to detect and deter bribery more efficiently.
Bribery cases, like price-fixing conspiracies, are covert and extremely difficult to uncover, as it is in the interest of the bribe giver and the bribe taker to keep the transaction a secret (see here and here). A system in which only the bribe-payer is eligible for leniency means that the bribe-taker has no incentive to go to the authorities. Even the bribe-payer has little incentive to do so unless and until he or she comes to believe that the CCDI has, or is about to obtain, information on the bribery scheme. But if either party to the transaction can escape punishment by reporting first, and also knows that they will face harsh punishment if the other party reports earlier, then wrongdoers would be more likely to turn against each other, with both sides feeling pressure to self-report first. Perhaps most importantly, this system sows distrust between potential bribers and potential bribe recipients, which might discourage many bribe transactions from happening in the first place. As noted above, this is essentially the strategy that the US DOJ’s Antitrust Leniency Program uses to break up cartels—the first, but only the first, cartel member to confess and report on its co-conspirators gets leniency—and this system has proven quite successful.
One attractive feature of extending the possibility of leniency to bribe-takers is that, at least in China, bribe schemes often involve the same firm or individual bribing multiple government officials (see, for example, here and here)—and those government officials may well be rivals and competitors. This rivalry means that these government officials have an additional incentive to blow the whistle on the bribery scheme, as in doing so they may bring down their political adversaries.
Apart from producing a greater number of reports early on, this sort of symmetric leniency system would create better incentives for confessing parties to describe their crimes fully and with honestly, instead of telling half-truths or making false claims. To illustrate, suppose that briber X gave a car to official Y to obtain a government subsidy. The investigator knows about the car, but not the subsidy. Under the current asymmetric leniency program, X might falsely claim that he gave the car to Y because Y solicited it, which would not even be a crime in China. The official, meanwhile, might insist that he received the car as a token of friendship. But if the system offers leniency to whomever comes first to tell the truth, then both parties might have a stronger incentive to report the crime accurately at the first place.
While this approach—expanding Article 390 so that it offers symmetrical leniency opportunities for both bribe-givers and bribe-takers, whichever reports first—would substantially improve China’s anti-bribery enforcement, it’s important to acknowledge several limitations. For one thing, even with this system in place, bribe-takers and bribe-givers might remain reluctant to disclose their unlawful deal, especially given the hostility to whistleblowing in China. (Both bribe-taking officials and bribe-paying private parties have much to lose if they get a reputation for turning on their transaction partners.) And China’s strong “zero tolerance” rhetoric on corruption within the Chinese Communist Party may make it politically difficult to embrace a system that offers the prospect of leniency to corrupt officials. (Bribe-paying private parties are sometimes viewed more sympathetically.) Still, if the goal is suppressing bribery as effectively as possible, pitting the interests of bribe-payers and bribe-takers against each other, through the use of a symmetric leniency program, may offer the most effective way forward.
Great post, Emma.
Just as antitrust misconducts, bribery is an activity difficult to detect and investigate. In bribery, they often use mechanisms that make it harder to investigate, such as cash payment and covert negotiations. I agree with you, the right track is to provide both sides with the same incentives to collaborate to the leniency program. If both parties (bribe givers and bribe takers) have equal incentives to collaborate, it will create a race for leniency that might raise the number of agreements in the future.
I got curious about this topic. Do you think there is a cultural resistance to extend leniency to bribe takers?
Thanks Rafael! Yes, I think that there is a general disapproval towards bribe taking, so the idea of letting any corrupt official walk free while sending the briber in jail might be difficult for the public to digest at first sight. But I believe this is not hard fact, and can be subject to change over time. For instance, we already see more disclosure of cases in which rich and resourceful bribe givers bribe many lower-level officials to gain undue advantages for themselves, and then they confess and get immunity while the officials go to jail. Afterwards, the bribe payers can just pick up where they left off and bribe the new officials in power. So it might be worthwhile to change that cultural resistance.
Thanks, Emma. I find your discussion of leniency fascinating and wonder what form leniency might actually take. I can imagine certain forms of leniency being more or less palatable to the public, reduced prison sentences rather than a slap on the wrist. I could also imagine certain types of leniency might be pitched as rehabilitative or that they might intersect with China’s social credit system. I’d be interested in whether you think leniency for giving and taking bribes should be symmetrical or whether it might take somewhat different forms given the perceived differences in the crime.
Thank’s a great question, Justin. Ideally, I would hope that the leniency could be symmetrical to both bribers and bribees. But if that is not an option because it would be considered too favorable to the corrupt officials, the government could explore some mitigated punishments to the officials (less jail time/reduced Party disciplines). But the change would still need to be substantive rather than cosmetic in order to incentivize them to come clean before the other side.
Fantastic post, Emma! Where do you think the lopsidedness in China’s Criminal Law arises from? By your account it seems widely criticized, and I’m wondering how it came to be in the first place.
Thanks Mayze! Actually this provision was not in the original 1979 Criminal Law, but it was written into the 1997 amendments, likely hoping to encourage more companies to volunteer disclosures and help the government uncover bribery schemes. It’s a great question but I’m not quite sure why they decided not to grant this leniency to bribe takers at the first place (or if they thought about it at all), because the legislative history for the criminal law is rather opaque. I guess this might be related to the general belief that government officials are held to a higher standard, and bribe givers are more worthy of sympathy. And then as time went by in the past decades, the problem of this lopsidedness became clearer.
This is a really interesting point; I had the same question as Mayze. I also wonder if China’s asymmetric approach may be due to political expediency. Perhaps the government simply believed it would be easier, with less business resistance, to address only half of the bribery equation.
Thanks Joshua! That’s an interesting perspective; I also feel that the government must have sensed less resistance and more legitimacy from focusing on corrupt officials. But decades have passed, and this approach seems to have failed its mission–generating the desired deterrence to rein in corruption involving the business sector.
Great post, Emma. I really enjoyed reading it. With your proposal, do you expect any problems to arise in defining who in a particular transaction is a bribe-giver or a bribe-taker? I can imagine a situation where those lines can become blurred (say, two closely related transactions). How would your proposal–a first, come first serve type of solution–address this perhaps murky definitional issue? Has it been a problem with the previous law?
Thanks Devon! Actually this law and leniency is only applicable to bribe-givers who bribe government officials (so the recipient is always an official). But you are absolutely right as the bribe-giver and bribe-taker, even both public officials, can be paying each other bribes in exchange for unfair advantages or favors. I think in the past, the investigators/prosecutors would evaluate the cooperation and punishment per transaction. So if Official A bribed Official B in transaction X, and Official B bribed Official A in a closely-related transaction Y, assuming they both confessed to their bribe-paying offenses, then A and B might not be punished for paying bribes, but still get punished for receiving bribes. But it is more likely that none of them would confess (because this way they are both better off), and the government might have no case at all. With the proposed leniency awarded to both sides, it can break that trust and create a strong incentive to confess, as if A confesses to both crimes, s/he can get leniency for both transactions.
What about a different form of asymmetry? If the asymmetrical treatment of givers and takers detailed in your post is solved with a forced prisoners’ dilemma, I worry that a new asymmetry will take place. Those with capital (financial, political, institutional, reputational) advantages would be more likely to report first and receive lenient punishment. Those will less capital might be less inclined to fess up. Surely, leniency for large corporations might impose a few absorbable costs: bad press, a small fine, legal fees, etc. A smaller company, or an individual, however, might not be able to shoulder those costs and would thus be less likely to admit to wrongdoing.
You’ve raised a great point, Daniel. But this asymmetry favoring the more powerful companies is already in existence and even exacerbated by the current system. Mega firms might be more likely to confess as it is easier for them to absorb the costs of reporting. Ex ante, they are also more likely to buy off officials from top to bottom to win business, and then turn on them later in exchange for leniency. While the current system imposes almost no checks on them because only they can obtain amnesty with confession, not the officials, the new/proposed system could at least increase the likelihood for some officials to turn them in.
For smaller firms, they might be reluctant to report under either system because of the high costs of reporting. In the current system, the CCDI (anticorruption watchdog) might drop the investigation because officials also have no incentive to confess. The proposed system might incentivize some officials to confess, but it is also a good thing, because a bribe is a bribe, and should be punished. Hopefully this would deter companies, regardless of its size, from bribing for business. (But realistically speaking, I feel the CCDI generally has less interests in investigating minor bribery offenses involving smaller firms with its limited enforcement resources).
Emma, thank you so much for such an insightful post. I find your argument that China should expand Article 390 to bribe takers really interesting. I think I have some hesitancy towards this, however, similar to Daniel. I wonder, though, if the pressure to self-report first could have some downsides? Yes, it may discourage bribe transactions from happening in the first place due to mistrust but also, could it actually facilitate bribes, allow both parties to benefit, and then allow one party to benefit even more by self-reporting? Or, will people engage in bribe transactions to just then bring down their political adversary?
Thanks Casandra! I think the first question is an important one, and I might not have a satisfactory answer. But one possible way to tackle the problem is to reduce the leniency awarded to recidivists, even if they are the first one to confess. As for the latter question, I think the current system actually makes such political purge more likely, because bribe-givers (as the ones who might design bribery schemes to frame their opponents) are the only ones who could be exempted from prosecution with confession.
Emma, thank you for sharing this post! I find the idea of turning bribe takers against bribe givers quite intriguing. I completely agree that restricting the availability of leniency to bribe givers is a poor approach, and that both parties should benefit equally from coming clean. That being said, even if the playing field has been leveled out, I’m wondering how effective this policy change will be if there are still cultural pressures that will skew the balance to one side. As you mentioned at the end of your post, reputation is a very important part of Chinese culture. Will bribe takers be more incentivized to report bribe givers knowing how strong China’s “zero tolerance” policy is? Will bribe givers be willing to take the risk of reporting a public official who could potentially retaliate shall they interact again in the future? It would be interesting to explore the effectiveness of these leniency programs across different cultural settings.
Thanks Ella! These are all great points. I agree that the policy might trigger different results when the settings change. Individual bribe-takers and bribe-givers might feel different levels of incentives depending on the severity of the violations, publicity of the cases, “intimacy” of their relationships, the specific jurisdictions/industries, etc. Partially due to such complexity and uncertainties, I am hesitant to believe that under the new policy, bribe-takers would be overall more willing to report than bribe givers, or the other way around. But I agree that it would be interesting to keep track of the variants and their effects on self reporting.