What This Bill Does
This bill changes federal laws about corruption to target specific practices by U.S. companies operating in China. It makes it illegal for American companies to take certain non-monetary actions (like hiring Chinese Communist Party officials or making political statements) that benefit the Chinese government or Communist Party. The bill treats these corporate actions the same way it treats paying bribes to foreign officials. (Sec. 2, Sec. 3)
##
Who It Affects
- U.S. companies that sell securities (stocks and bonds) to the public
- U.S. domestic companies that do business internationally
- Foreign companies doing business in the U.S.
- U.S. enforcement agencies
- Anyone working for or representing these companies
##
Key Provisions
- Defines "covered investment" as any direct or indirect contribution of assets, including acquiring ownership stakes or lending money (Sec. 3(a)(1)(A), Sec. 3(b)(1)(A), Sec. 3(c)(1)(A))
- Makes it illegal to take corrupt actions including: denying or excusing human rights abuses in Xinjiang; restricting freedom of expression in Hong Kong; supporting China's territorial claims in Taiwan, Tibet, or the South China Sea; or making covered investments with entities on government restriction lists (Sec. 3(a)(1)(B), Sec. 3(b)(1)(B), Sec. 3(c)(1)(B))
- Removes normal legal defenses when violations involve these specific corrupt actions, and increases minimum civil penalties to three times the standard penalty amount (Sec. 3(a)(1)(B), Sec. 3(b)(1)(B), Sec. 3(c)(1)(B))
- Allows companies to defend themselves by proving the action had a reasonable business purpose unrelated to market access or avoiding punishment (Sec. 3(a)(1)(B), Sec. 3(b)(1)(B), Sec. 3(c)(1)(B))
- Allows evidence that actions contradicted company policy to prove the company acted corruptly (Sec. 3(a)(1)(B), Sec. 3(b)(1)(B), Sec. 3(c)(1)(B))
##
What Changes
The bill adds new requirements to three federal anti-corruption laws that apply to: companies with publicly traded securities, U.S. domestic companies with international business, and foreign persons doing business in America.
These laws now specifically prohibit taking beneficial non-monetary actions for the Chinese Communist Party, Chinese government, or their associated entities. Previously, the laws mainly focused on payments of money to foreign officials. Companies can no longer avoid penalties by claiming these non-monetary actions lack a reasonable business purpose related to market access.
The bill requires judges to accept evidence that actions contradicted company policies as proof of corrupt intent. Companies lose the normal legal defenses they previously had available.
##
Important Definitions
- **Covered investment**: Any direct or indirect contribution or commitment of assets, including buying ownership stakes or making loans. This does NOT include buying or selling goods and services with wholly-owned U.S. subsidiaries (Sec. 3(a)(1)(A), Sec. 3(b)(1)(A), Sec. 3(c)(1)(A))
- **Corporate actions currying favor with the Chinese Communist Party**: Non-monetary actions that benefit the Chinese Communist Party or government, including hiring Communist Party officials, making political statements supporting the party, or making investments in restricted entities (Sec. 2(3))
- **Corrupt action**: An action taken to deny, excuse, or support human rights abuses; support China's territorial claims; express political advocacy for the Communist Party; or make covered investments in restricted entities (Sec. 3(a)(1)(B), Sec. 3(b)(1)(B), Sec. 3(c)(1)(B))
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II
118TH CONGRESS
1ST SESSION
S. 151
To amend the Securities Exchange Act of 1934 to address corrupt practices
of the Government of the People’s Republic of China, and for other purposes.
IN THE SENATE OF THE UNITED STATES
JANUARY 30, 2023
Mr. RUBIO introduced the following bill; which was read twice and referred
to the Committee on Banking, Housing, and Urban Affairs
A BILL
To amend the Securities Exchange Act of 1934 to address
corrupt practices of the Government of the People’s Re-
public of China, and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Countering Corporate
4
Corruption in China Act of 2023’’.
5
SEC. 2. FINDINGS.
6
Congress finds the following:
7
(1) In section 1 of the National Security Study
8
Memorandum issued on June 3, 2021 (relating to
9
establishing the fight against corruption as a core
10
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United States national security interest), President
1
Joseph R. Biden, Jr., established countering corrup-
2
tion as a core United States national security inter-
3
est.
4
(2) The practices of the Chinese Communist
5
Party, the Government of the People’s Republic of
6
China, and instrumentalities of the Government of
7
the People’s Republic of China pose a unique chal-
8
lenge to the enforcement of section 30A of the Secu-
9
rities Exchange Act of 1934 (15 U.S.C. 78dd–1)
10
and sections 104 and 104A of the Foreign Corrupt
11
Practices Act of 1977 (15 U.S.C. 78dd–2, 78dd–3)
12
(referred to collectively in this section as the ‘‘cor-
13
porate anti-corruption laws’’).
14
(3) The Chinese Communist Party, the Govern-
15
ment of the People’s Republic of China, and instru-
16
mentalities of the Government of the People’s Re-
17
public of China routinely frustrate the enforcement
18
of the corporate anti-corruption laws by leveraging
19
access to the markets of the People’s Republic of
20
China to cause companies that are subject to the
21
corporate anti-corruption laws to improperly provide
22
valuable benefits to those entities in the form of
23
principally nonmonetary actions (referred to collec-
24
tively in this section as ‘‘corporate actions currying
25
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•S 151 IS
favor with the Chinese Communist Party’’), which
1
include—
2
(A) the hiring, promotion, or retention of
3
Chinese Communist Party officials and children
4
of those officials, such as the unlawful practices
5
admitted to by certain entities subject to the
6
corporate anti-corruption laws in what are com-
7
monly known as the ‘‘princelings’’ settlements;
8
(B) political advocacy on behalf of the
9
goals and policies of the Chinese Communist
10
Party in the People’s Republic of China, the
11
United States, and the rest of the world, includ-
12
ing by—
13
(i) assisting in the denial, obfuscation,
14
or excusal of—
15
(I) genocide and other atrocities
16
committed by the Chinese Communist
17
Party, the Government of the People’s
18
Republic of China, and instrumental-
19
ities of the Government of the Peo-
20
ple’s Republic of China;
21
(II) the extrajudicial detainment,
22
subjection to forced labor, torture,
23
and political indoctrination of, and
24
other severe human rights abuses with
25
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respect
to,
Uyghurs,
Kazakhs,
1
Kyrgyz, and members of other pre-
2
dominantly Muslim ethnic groups by
3
the Government of the People’s Re-
4
public of China in the Xinjiang
5
Uyghur Autonomous Region of China
6
(or comparable treatment of members
7
of other ethnic, religious, and political
8
groups who reside elsewhere in the
9
People’s Republic of China);
10
(III) censorship or other activi-
11
ties with respect to Hong Kong
12
that—
13
(aa) prohibit, limit, or penal-
14
ize the exercise of freedom of ex-
15
pression or assembly by the citi-
16
zens of Hong Kong; or
17
(bb) limit access to free and
18
independent
print,
online,
or
19
broadcast media; and
20
(IV) the extrajudicial rendition,
21
arbitrary detention, or torture of any
22
individual in Hong Kong or other
23
gross violations of internationally rec-
24
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ognized human rights in Hong Kong;
1
and
2
(ii) supporting, legitimizing, or recog-
3
nizing the unlawful territorial claims of the
4
Government of the People’s Republic of
5
China in Taiwan, Tibet, Korea, the South
6
China Sea, the East China Sea, and other
7
locations in which such claims are con-
8
tested; and
9
(C) investments without reasonable busi-
10
ness purposes in industries targeted for support
11
by the Chinese Communist Party, the Govern-
12
ment of the People’s Republic of China, or in-
13
strumentalities of the Government of the Peo-
14
ple’s Republic of China, including by entering
15
into a joint venture with such an instrumen-
16
tality or an entity affiliated with such an in-
17
strumentality.
18
(4) Corporate actions currying favor with the
19
Chinese Communist Party are valuable to officials of
20
the Chinese Communist Party, the Government of
21
the People’s Republic of China, and instrumental-
22
ities of the Government of the People’s Republic of
23
China, and constitute payments of value for the pur-
24
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poses of subsection (a) of each of the corporate anti-
1
corruption laws, because those actions are—
2
(A) directly or indirectly financially valu-
3
able to those officials due to—
4
(i) the extent of corruption in the
5
People’s Republic of China;
6
(ii) the reliance of the economy of the
7
People’s Republic of China on state-owned
8
enterprises; and
9
(iii) the integration of the party-state
10
with business enterprises in the People’s
11
Republic of China; and
12
(B) valuable to the interests of the Chinese
13
Communist Party, and officials of that Party,
14
in a manner that is distinct from any inde-
15
pendent economic or public interest rationale
16
for those actions.
17
(5) Corporate actions currying favor with the
18
Chinese Communist Party are taken corruptly for
19
the purposes of each of the corporate anti-corruption
20
laws because those actions—
21
(A) have no reasonable business purpose
22
unrelated to obtaining or retaining business
23
within the People’s Republic of China and in-
24
stead relate to—
25
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•S 151 IS
(i) accessing markets within the juris-
1
diction of the People’s Republic of China;
2
or
3
(ii) avoiding injury threatened by the
4
Chinese Communist Party, the Govern-
5
ment of the People’s Republic of China, or
6
instrumentalities of the Government of the
7
People’s Republic of China; and
8
(B) are morally wrongful to the extent that
9
those actions contribute to denying, obfus-
10
cating, or excusing—
11
(i) genocide and other atrocities; and
12
(ii) the extrajudicial detainment, sub-
13
jection to forced labor, torture, and polit-
14
ical indoctrination of, and other severe
15
human rights abuses with respect to, indi-
16
viduals by the Chinese Communist Party,
17
the Government of the People’s Republic of
18
China, or instrumentalities of the Govern-
19
ment of the People’s Republic of China.
20
(6) Despite the public and prominent under-
21
taking of corporate actions currying favor with the
22
Chinese Communist Party by individuals and enti-
23
ties that are subject to the corporate anti-corruption
24
laws, the Federal Government has undertaken little
25
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•S 151 IS
enforcement with respect to those corporate actions
1
due to an apparent difficulty in demonstrating that
2
the actions are corrupt, or of value to a foreign offi-
3
cial, because of the principally nonmonetary nature
4
of those actions.
5
(7) In addition to undermining the public inter-
6
est in the enforcement of the corporate anti-corrup-
7
tion laws in the manner described in paragraphs (2)
8
through (6), corporate actions currying favor with
9
the Chinese Communist Party undermine the public
10
interest in the enforcement of the laws of the United
11
States, including—
12
(A) sections 4 and 5 of the Act entitled
13
‘‘An Act to ensure that goods made with forced
14
labor in the Xinjiang Autonomous Region of the
15
People’s Republic of China do not enter the
16
United States market, and for other purposes’’,
17
approved December 23, 2021 (Public Law 117–
18
78; 135 Stat. 1525) (referred to in this section
19
as the ‘‘Uyghur Forced Labor Prevention Act’’)
20
(including the amendment made by section 5 of
21
that Act), by—
22
(i) reducing the awareness of entities
23
subject to, or potentially subject to, that
24
Act regarding the application of that Act
25
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•S 151 IS
to activities in the Xinjiang Autonomous
1
Region of the People’s Republic of China
2
or elsewhere in the People’s Republic of
3
China;
4
(ii) aiding and abetting violations of
5
that Act; and
6
(iii) reducing the information available
7
to law enforcement officials in the United
8
States regarding the activities described in
9
clause (i); and
10
(B) United States sanctions laws with re-
11
spect to persons and entities in the People’s Re-
12
public of China (collectively referred to in this
13
section as the ‘‘sanctions laws of the United
14
States’’)—
15
(i) including—
16
(I) section 1237 of the Strom
17
Thurmond National Defense Author-
18
ization Act for Fiscal Year 1999
19
(Public Law 105–261; 50 U.S.C.
20
1701 note);
21
(II) sections 4 and 5 of the
22
Uyghur Forced Labor Prevention Act
23
(including the amendment made by
24
section 5 of that Act);
25
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(III)
the
Global
Magnitsky
1
Human Rights Accountability Act
2
(subtitle F of title XII of Public Law
3
114–328; 22 U.S.C. 2656 note);
4
(IV) Executive Order 13818 (50
5
U.S.C. 1701 note; relating to blocking
6
the property of persons involved in se-
7
rious human rights abuse or corrup-
8
tion), as amended on or after the date
9
of enactment of this Act;
10
(V) Executive Order 13959 (50
11
U.S.C. 1701 note; relating to address-
12
ing the threat from securities invest-
13
ments that finance Communist Chi-
14
nese military companies), as amended
15
before, on, or after the date of enact-
16
ment of this Act and as superseded in
17
part before, on, or after the date of
18
enactment of this Act; and
19
(VI) Executive Order 14032 (50
20
U.S.C. 1701 note; relating to address-
21
ing the threat from securities invest-
22
ments that finance certain companies
23
of the People’s Republic of China), as
24
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•S 151 IS
amended before, on, or after the date
1
of enactment of this Act; and
2
(ii) by facilitating investment in, or
3
transactions with, entities in which invest-
4
ment is, or with which transactions are,
5
prohibited under the sanctions laws of the
6
United States by—
7
(I) providing principally non-
8
monetary benefits of value to those
9
entities, which, in turn, become finan-
10
cially valuable to those entities in a
11
manner that is directly traceable to
12
those benefits, such as with respect to
13
raising capital from international cap-
14
ital markets;
15
(II) investing in, or transacting
16
with, entities not subject to the sanc-
17
tions laws of the United States under
18
circumstances that suggest that those
19
entities will, in turn, invest in or
20
transact with other entities that are
21
subject to the sanctions laws of the
22
United States; and
23
(III) reducing the information
24
available to law enforcement officials
25
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in the United States for the purpose
1
of enforcing the sanctions laws of the
2
United States.
3
(8) The requirements of this Act, and the
4
amendments made by this Act, are justified by—
5
(A) the public interest in mitigating the
6
threats to the enforcement of the corporate
7
anti-corruption laws, and the sanctions laws of
8
the United States, that are posed by the Chi-
9
nese Communist Party, the Government of the
10
People’s Republic of China, and instrumental-
11
ities of the Government of the People’s Repub-
12
lic of China;
13
(B) the foreign policy interests achieved by
14
this Act and the amendments made by this Act;
15
and
16
(C) the fact that those requirements—
17
(i) are confined to the specific conduct
18
of entities and persons subject to the cor-
19
porate anti-corruption laws based on ob-
20
servable patterns of behavior demonstrated
21
by those entities and persons; and
22
(ii) do not subject any entity or per-
23
son described in clause (i) to any criminal
24
penalty.
25
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SEC. 3. AMENDMENTS REGARDING PROHIBITED FOREIGN
1
TRADE PRACTICES.
2
(a) ISSUERS.—
3
(1) IN GENERAL.—Section 30A of the Securi-
4
ties Exchange Act of 1934 (15 U.S.C. 78dd–1) is
5
amended—
6
(A) in subsection (f), by adding at the end
7
the following:
8
‘‘(4) The term ‘covered investment’—
9
‘‘(A) means any direct or indirect contribu-
10
tion or commitment of assets, including any—
11
‘‘(i) acquisition of an equity interest
12
or convertible equity interest; or
13
‘‘(ii) loan or other debt interest; and
14
‘‘(B) does not include a transaction in
15
goods or services, or any related party trans-
16
action, with a wholly owned subsidiary of an en-
17
[Text truncated for display. Full text available on Congress.gov.]