UK company bribed Chinese official

Published on December 14, 2009 by brooks | This story has been viewed 657 times

A BRITISH environmental consulting company which lists “integrity” among its corporate values bribed a Chinese official with £15,000 to win contracts, according to official reports of a court case in Shanghai. Environmental Resources Management (ERM) is said to have paid off an influential bureaucrat in the city’s environmental protection office who is now on trial.

It is believed to be the first time a British company has been named in a high-profile Chinese bribery case. ERM, which has worked on the 2012 London Olympics and counts Marks & Spencer and BP among its clients, operates in 39 countries and has an annual worldwide turnover of more than £400m. It says on its website that it expects “the highest level of ethical behaviour and personal integrity in all our transactions”.

The company, which describes itself as the world leader in its field, has shown Marks & Spencer how to reduce the carbon footprint of its clothes, advised the organisers of London’s Olympic bid on environmental strategy for a sustainable Games, and examined BP’s plans for a liquefied natural gas field in Indonesia to assure international lenders that it complied with global standards.

ERM also helped the giant Chinese energy company Sinopec to prepare a presentation to the United Nations to demonstrate its commitment to human rights and the environment, and its opposition to corruption.

However, the proceedings inside courtroom 101 of the Shanghai middle court have illustrated how a senior manager of ERM became involved in a corrupt system of favours and gifts to which many companies resort to do business with Chinese officials.

Prosecutors told the court that the defendant Yan Shunjun confessed to receiving €4,000 and $20,000 from ERM’s managing director in Shanghai, Wang Yong. The dollars were supposed to pay for Yan’s daughter to be educated overseas.

The payoff was among a total of 1.2m yuan (about £100,000) taken from various firms by Yan, 63, while he was deputy director of the Shanghai Environmental Protection Bureau, the court heard.

Yan’s defence lawyer said his client had admitted guilt, had returned the money to the state and was pleading for leniency because he suffered from cirrhosis of the liver.

Court officials said last week that a date would soon be set for Judge Xue Zheng to deliver his verdict and pass sentence.

The case arose out of efforts made by local staff to obtain a grade A licence from the Chinese authorities, which enabled it to compete for government contracts to evaluate the environmental impact of a huge industrial development at Hangzhou Bay, south of Shanghai. The land has been home to wildlife including the Chinese water deer and numerous migrating bird species.

According to a report in a Shanghai newspaper, Yan told the court: “Without my help it was impossible for ERM to get the upgrade because the Chinese administration is very strict in auditing foreign companies and it takes a long time.”

Yan had been put in charge of the evaluation process for the Hangzhou Bay area, billed as a showcase of “clean” new industries.

ERM subsequently received two contracts for the Hangzhou Bay project worth £108,000, the state media reported. The company refused to confirm the figure.

Two firms on ERM’s blue-chip client list, BP and Sinopec, are big investors in a petrochemical complex on the site, but the Chinese authorities apparently saw no conflict of interest in awarding the environmental evaluation to ERM.

Wang, the man said to have paid the bribe, left ERM two weeks ago, according to staff at its office in Shanghai. “We cannot tell you the reason or whether he was dismissed,” said a manager.

Contacted later by The Sunday Times, Wang said: “I’m sorry that so far I cannot say anything to the media.”

The company said he had resigned.

Environmental campaigners say corruption of the kind alleged by prosecutors in the trial has weakened the Chinese government’s efforts to curb pollution by powerful companies.

The ERM case therefore highlights doubts about China’s ability to enforce its pledge to restrict carbon emissions, a key part of its stance at the Copenhagen climate change talks.

The case has attracted little attention in China, but there has been a vigorous discussion on the website of the People’s Daily, the Communist party’s flagship newspaper, about why foreign companies bribe Chinese officials.

“In China, offering bribes is an investment. No bribe, no chance of business,” wrote a contributor named Xie Xinrong.

“Foreign firms have quickly learnt the philosophy of guangxi [connections],” wrote Professor Cheng Baozhi of Nankai University. “Their rule has become, ‘When in Rome, do as the Romans do’.”

An unnamed senior manager at a foreign company told the paper: “You have to adapt to the survival of the fittest or your company can’t survive in China.

“If everyone is rushing on to a bus and you obey the rules and queue up, you’ll never get on the bus.”

ERM said in a statement: “Dr Wang has not been charged with any wrongdoing and ERM Group had no advance warning of any of the alleged payments to the former deputy director of the Shanghai Environmental Protection Bureau. To suggest otherwise is damagingly inaccurate.”

The company added that its staff in China had undertaken training in its code of business conduct and ethics, which prohibited payments to government officials.

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