‘Stealing an Order’, Embezzlement or Bribery?

In 2008, Company B purchased products from Company A. The price was decided in a special procedure, which said as Wong the employee of Company A provided the proposal to Jiang the employee of Company B, and Jiang submitted the proposal to the manager of Company B for the final determination. In 2010, Wong and Jiang colluded in malicious, and planned that, 1) Jiang transferred the payment paid by Company B to Company C (established by Wong and his wife Chen) instead of Company A; 2) Wong reduced the price of the products of Company A, and received payments from Company C instead of Company B. After these procedures, Company C had obtained the price variance amount to RMB 1,120,000, and Jiang got the commission for around RMB190, 000. These actions, such as the employee takes advantage of his position to transfer the employer’s deal or steal the employer’s business opportunities, is the so called ‘Stealing an Order’.

In the above case, Jiang and Wong have been guilt of crime of embezzlement and sentenced to fixed–term imprisonments of 6 years 10 months, and 3 years 6 months, in addition, the property that they received illegal had be confiscated.

In fact, in the judicial practice, such ‘Stealing an Order’ cases, the employee might be sentenced for the crime of embezzlement or bribery. Especially for the case in the beginning, there are different opinions for Jiang’s action. The main reason for this dispute is that there are too many similarities between the 2 crimes, including, 1) the employee has taken advantage of his position; 2) the employee might have received benefits from a third party; 3) such action might bring damages to the employer, and etc..

After analyzing the judgments on the ‘Stealing an Order’ cases, there are several tips on distinguish the crime of embezzlement and the crime of bribery:

First, to analyze the intention of the employee. If the employee ought to know that his action might bring damages to the employer based on his job responsibilities and experience, then normally such action might be deemed as the crime of embezzlement. If the employee just receives ‘benefits’ by doing favor to a third party, such as he is involved in a session of the whole criminal activity, and does not know the whole criminal activity or does not lead the criminal activity, then it is more possible for the court to decide it as the crime of bribery.
Second, to analyze whether the employer has a stable business relationship with the counterparty before the ‘Stealing an Order’ action. The subject of the crime of embezzlement is the employer’s property, so whether the employer has damage is an important factor. While the counterparty is just a potential client, which has not had transitions with the employer before, normally such action might not be deemed as the crime of embezzlement. For example, the employee takes advantage of his position to add a third party between the employer and the counterparty, by which the third party could obtain the price variance (the ‘Stealing an Order’ case type 1).

Finally, in the ‘Stealing an Order’ case type 1, sometimes there are other important factors on deciding the specific crime, such as whether the employee has disclosed his real identity to the counterparty, or the relationship between the employee and the third party. If the employee has intentionally concealed his real identity to the other people in a specific session of the whole transition, the employee manages the third party, the employee is the shareholder of the third party, or the employee interacts with the third party too often, then such action might possibly be deemed as the crime of embezzlement.

Since the ‘Stealing an Order’ activities are secretly and various, for the individual cases, whether the employer could claim for the crime of embezzlement or the crime of bribery, it shall be analyzed case by case.