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Foreign multinational corporations investing in the People's Republic of China and Chinese multinational corporations investing in other countries can often be held accountable when they violate the Foreign Corrupt Practices Act (FCPA) and other anti-bribery laws.  These laws prevent government corruption including illegal payments to customs agents, bribes for construction contracts, illegal kickbacks for regulatory approval, and other illegal business practices.  Through the Foreign Corrupt Practices Act (FCPA), whistleblowers are encouraged to step up and confidentially report corruption.  Under new whistleblower protections, these Chinese whistleblowers and multinational corporation whistleblowers can confidentially report violations through a Foreign Corrupt Practices Act Lawyer and receive large financial rewards for being the first to properly expose significant government corruption. 

If you are aware of illegal international trade practices including violations of the Foreign Corrupt Practice Act (FCPA) by a multinational corporation in China or a Chinese corporation in another country, please feel free to contact China Customs Agent Bribe Whistleblower Lawyer and Chinese International Business Illegal Bribe Whistleblower Reward Lawyer Jason Coomer via e-mail message  or use our submission form to have a foreign corrupt practices act attorney review a potential China Business Bribe Bounty Reward Action, Chinese Customs Agent Whistleblower Lawsuit, Chinese Government Official Construction Contract Bribe Whistleblower Bounty Action, Foreign Corrupt Practices Act Violation Whistleblower Reward Lawsuit, or other Foreign Corruption Practices Act Securities and Exchange Commission Bounty Action. 

China's Emerges as an Economic Superpower through International Trade, Modernizing Chinese Ports & Distribution Systems, Logistics Parks, and Allowing Foreign Investment

The People's Republic of China (PRC) has a population of over 1.3 billion and is the most populous state in the world.  The Communist Party of China governs the People's Republic of China and exercises control over 22 provinces (23 provinces if Taiwan is included), five autonomous regions, four directly controlled municipalities (Beijing, Tianjin, Shanghai, and Chongqing), and two mostly self-governing special administrative regions (SARs), Hong Kong and Macau. Because of this government control of Chinese industries, bribery of Chinese officials, Chinese government bribes, and illegal kickbacks to Chinese customs agents and Chinese regulatory agents are more common. 

The capital city of the People's Republic of China (PRC) is Beijing.  Since the introduction of market-based economic reforms in 1978, China has become the world's fastest-growing major economy.  Since the 1980s, the People's Republic of China has used international trade and foreign investment to emerge as an economic superpower.  From 2001 to 2010, China's international trade imports and exports increased from about $500 billion per year to approximately $3 trillion per year.  A large part of this rapid expansion can be attributed to foreign direct investment that has surged into China.  As of 2012, the People's Republic of China (PRC) has become the world's second-largest economy by both nominal GDP and purchasing power parity (PPP), and is also the world's largest exporter and second-largest importer of goods.

China has spent large amounts of money to construct and modernize approximately 160 Chinese ports including about 50 coastal ports and 110 inland river ports. These ports are an essential part of the development of China's massive import and export international trade.  By investing billions of dollars in these ports, China had been able to drastically increase the total handling capacity of harbors along China’s coast as well as continuously expand its import and export businesses.

The Modernization of Chinese Ports & Distribution Systems by Allowing Foreign Investment has Greatly Expanded China's Ability to Import and Export Goods as well as Develop Manufacturing Industries

This Chinese import and export network is formed around three major harbor areas: 1) The Bohai Sea area of northern China (including Beijing) is serviced by the ports of Tianjin, Dalian and Yantai; 2) the Yangtze River Delta area includes the ports of Shanghai and Ningbo; and 3) the Pearl River Delta in southern China includes the ports of Shenzhen, Guangzhou and Hong Kong. These ports have experienced tremendous growth and expansion over the last decade and have helped China increase its international trade.

To help develop Chinese ports, the Chinese government has encouraged foreign direct investment into port modernization programs.  By bringing in foreign investments including resources and technology, the Chinese government has been able to successfully expand international trade including imports and exports.  Through liberalization of foreign investment restrictions in the modernization of Chinese ports, the Chinese ministries have been able to improve international trade and port logistics  including in the areas of transportation, freight forwarding, storage, warehousing, and port management.

China's largest and busiest ports include Port of Hong Kong, Port Shanghai, Port of Shenzhen, Port of Guangzhou, Port of Qingdao, Port of Dalian, Port of Lüshunkou, Port of Jiuzhou, Port of Suzhou, Port of Xiamen, Port of Ningbo, and Port of Tianjin.  This thriving network of Chinese ports have seen modernization and logistical technology used to greatly increase China's ability to import and export goods leading to economic prosperity.

However, with this expansion on imports and exports has come fierce competition for Chinese business and huge profits that can be obtained through government corruption and illegal bribes.  These violations include violations of the Foreign Corrupt Practices Act by Multinational Corporations, their wholly owned subsidiaries, joint venture partners, and agents.  These complicated business structures commonly create elaborate bribery schemes to obtain and retain Chinese business including bribing public officials and customs agents to circumvent container certification, legal customs, import requirements, and other legal requirements.  These illicit payments are often paid through an elaborate kickback scheme where employees and agents of large multinational corporation or their wholly owned subsidiary falsely characterize illicit payments to public officials as commissions or other expenses.  Many of these illicit payments are made through foreign banks and are actually kickbacks paid to government officials.

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There is a worldwide effort by the international community to crack down on government corruption, illegal kickbacks, and illegal bribes.  This effort includes initiatives by the United States to identify and prosecute illegal bribery schemes of government officials.  To identify hard to detect bribery schemes, the United States Securities Exchange Commission is offering large bounties (whistleblower rewards) for persons with specialized knowledge of systematic bribes and complicated bribery schemes.  These large economic incentives are designed to encourage import export experts, customs experts, logistics experts, and other persons aware of complicated import and export bribes and government fraud to step up and become a confidential import export bribe whistleblower, customs fraud whistleblower, logistics whistleblower, and other international trade whistleblower.

The United States Bounty Actions are set up under the Foreign Corrupt Practices Act (FCPA).  The FCPA applies to “issuers” (U.S. and foreign companies listed on U.S. securities exchanges and their employees); “domestic concerns,” which run the gamut of business entities organized under U.S. laws or with their principal place of business in the United States; the officers, directors, employees, and agents of those U.S. business entities (irrespective of nationality); U.S. citizens; U.S. resident aliens; “any person,” including all foreign persons, who commit an act in furtherance of a foreign bribe while in the United States, and U.S. businesses and nationals acting abroad. A Company must require all of its affiliated companies and all of their employees to comply with the Foreign Corrupt Practices Act.

For information on specific Chinese Ports and more information on China Import Bribe Whistleblower Actions and China Export Bribe Whistleblower Actions, please go to the following web page on China False Container Certification Bribe Lawyer, China Export Bribe Lawyer, China Port Official Bribe Lawyer, Chinese Government Official Illegal Payment Whistleblower Reward Lawyer, and China Customs Agent Bribe Lawyer.

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The Foreign Corrupt Practices Act (FCPA) prohibits bribery of foreign officials by U.S. companies and foreign companies listed on the U.S. securities exchange.  The Foreign Corrupt Practices Act (FCPA) also requires such companies to maintain accurate books and records.  Foreign Corrupt Practices Act Whistleblowers that properly report violations of the Foreign Corrupt Practice Act by a U.S. or foreign companies listed on the U.S. securities exchanges can recover a large reward for exposing Foreign Corrupt Practices Act (FCPA) violations. 

Chinese whistleblowers, multinational corporation employee whistleblowers, and other persons with evidence of Chinese government official corruption can work confidentially through Foreign Corrupt Practices Act violation lawyers to expose government corruption and recovery large financial rewards for reporting the illegal conduct.  By exposing and preventing government corruption in China, the whistleblower will be able to help the Chinese economy as a whole, improve the flow of foreign direct investment into China, and benefit the Chinese people.

Evidence of government corruption will usually include proof of illegal payments, accounting information, bank statements, video, e-mail messages, contracts, and false certifications.  Further, these corruption scams can often be very sophisticated and include multiple companies through joint ventures and subsidiaries.  Typically a combination of evidence and insider knowledge is needed to expose the government corruption. 

Slush Funds, Illegal Bribes, Illegal Kickbacks, and Illegal Gifts

The Foreign Corrupt Practices Act (FCPA) prohibits the offer or making of payments or giving anything of value, either directly or indirectly, to any foreign official, political party or political candidate, or public international organization to obtain or maintain business when the offer, payment or gift is intended to influence a desired action; induce an act in violation of a lawful duty; cause a person to refrain from acting in violation of a lawful duty; secure any improper advantage; or influence the decision of a government or instrumentality. 

These prohibitions preclude payments that are unlawful under the laws of the country in which payment was made; payments that are not legitimate expenses directly related to the promotion, demonstration or explanation of the company’s product or services; and payments that are not made in accordance with a contract between the company and a foreign entity.  These prohibitions also include third party actions where the company knows that a payment or a gift will be provided to a government official or agency for the purpose of obtaining a contract or business. 

"Giving anything of value" can include cash, slush funds, kickbacks, tax benefits, information and promises of future employment, scholarships, discounts, entertainment, travel expenses and insurance benefits.  FCPA bribery is an illegal offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in charge of a public or legal duty. The bribe is the gift bestowed to influence the recipient's conduct. It may be any money, good, right in action, property, preferment, privilege, emolument, object of value, advantage, or merely a promise or undertaking to induce or influence the action, vote, or influence of a person in an official or public capacity.  Evidence of illegal bribes often include accounting records, bank records, business contracts, and e-mail correspondence.

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Because of the success of the rapidly growing Chinese economy, many multinational corporations are competing fiercely to do business in China including large construction contracts, pharmaceutical contracts, infrastructure contracts, financial services contracts, and other lucrative contracts.  Further, because of the currency trading rate for the Chinese currency and the low cost of labor, many foreign corporations are investing in manufacturing plants in China.  These factors combined with Chinese government run industries have created a fertile environment for illegal payments to government officials, bribery schemes, and other violations of the Foreign Corrupt Practices Act.

With the rapid expansion of international trade and globalization of manufacturing and supply chains, the world economy is changing.  As such, with the globalization of production and consumption, there has become a demand for advances in logistics and shipping.  These advances include structural changes in inter-port relations and port-hinterland relationships.  Through logistics China has strengthened the role its ports as nodes within the global transport system. Historically ports were measured on their ability to accommodate ships and other modes of transport effectively and efficiently. Contemporary developments in transportation, however, dictate that emphasis has shifted to the ability of ports to fulfill new roles in the logistics era within the context of operating as part of an integrated global supply chain system.

The role of modern seaports involves integration into the supply chain. The port is considered as part of a cluster of organizations in which different logistics and transport operators are involved in bringing value to the final consumers. In order to be successful, such channels need to achieve a high degree of coordination and cooperation. The determination of the parameters that encompass the extent of integration of ports/terminals in global supply chains has, therefore, become of great importance for ports.

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Corporations that pay illegal kickbacks and bribes to government officials and former government officials in exchange for contracts including large building projects can be brought to justice and made to pay large penalties under the Foreign Corrupt Practices Act and whistleblowers that bring these corporations to justice may be able to collect large economic rewards under the  Securities Exchange Act (SEC Whistleblower Bounty Actions) and the Commodity Exchange Act (CFTC Whisteblower Bounty Actions).

The Illegal Bribe Whistleblower or Illegal Kickback Whistleblower may be entitled to not only the amount of the illegal bribe or kickback, but the benefit of the illegal bribe or kickback.  In cases where $100,000.00 bribe is made to obtain a $100 million building project, the Illegal Bribe Whistleblower or Illegal Kickback Whistleblower may be entitled to 10 to 30% of the $100,000,000.00 and the $100,000.00 translating into a $10 million to $30 million award.


Former CEO and Two Board Members of Publicly Traded Chinese Company Charged in Connection with $50 Million Scheme to Defraud SEC, Investors and Others

WASHINGTON – Shelly S. Singhal, Loretta Fredy Bush and Dennis L. Pelino, formerly of Xinhua Finance Limited, have been charged with engaging in a conspiracy to defraud the U.S. Securities and Exchange Commission (SEC), investors and others and to enrich themselves through a series of undisclosed and disguised related party transactions and insider trading that generated proceeds in excess of $50 million.

The indictments, returned today by a grand jury in the U.S. District Court for the District of Columbia, were announced by Robert D. Okun, the Acting U.S. Attorney in this case, and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.

The grand jury returned a ten-count indictment against Singhal, 43, from Newport Beach, Calif., Bush, 52, from Shanghai, and Pelino, 63, from Miami Beach, Fla.

The indictment charges the defendants with conspiracy, mail fraud and false statements in connection with their use of nominees and nominee entities (a) to obtain things of value from Xinhua Finance without having to disclose the transactions as related party transactions in reports furnished to the SEC and investors; (b) to sell Xinhua Finance shares without having to disclose the sale of shares in reports furnished to the SEC and investors, and (c) to manipulate Xinhua Finance’s balance sheet to avoid potentially negative impairment charges.

Xinhua Finance provided financial information products focused on China’s financial markets and integrated providers of market indices, ratings, financial news and analysis and investor relations for China. Xinhua Finance, headquartered in Shanghai was the first Chinese initial public offering in Japan, the first non-Japanese equity to list on the Mothers Board of the Tokyo Stock Exchange, and the first foreign stock traded in Japan through an international settlement agreement, which allowed investors globally to invest in Xinhua Finance. According to one of Xinhua Finance’s public filings with the SEC, Xinhua Finance “was founded in anticipation of the growing need for transparent and reliable financial information and data flow into and out of China.” In July 2005, Xinhua Finance established a sponsored Level 1 American Depository Receipt (ADR) facility and its ADRs traded on the United States over-the-counter market using the stock trading symbol “XHFNY.”

According to the indictment, Singhal was the chairman of Xinhua Finance’s audit committee and a member of its compensation committee and investment committee. Bush was Xinhua Finance’s chief executive officer and vice chairman of Xinhua Finance’s board of directors. Pelino was the chairman of Xinhua Finance’s compensation committee and a member of its audit committee and investment committee.

According to the indictment, Singhal and Pelino used a nominee entity to acquire preferred shares of Xinhua Finance from a warrant holder for their own benefit. The defendants used their positions as insiders of Xinhua Finance to accelerate the lock-up period to sell the preferred shares ahead of similarly situated investors. The indictment charges that the defendants concealed their conduct and the $21.7 million in proceeds that the sale of those shares generated in reports and statements that Xinhua Finance furnished to the SEC and investors.

The indictment also alleges that, in separate transactions, Pelino and Bush sold their own Xinhua Finance shares for proceeds of more than $25 million using a nominee entity controlled by Singhal. To conceal Bush’s share sales, Singhal directed the creation of backdated agreements to give the false appearance that Bush pledged the shares to the nominee for purposes of securing a loan. The indictment charges that the defendants caused Xinhua Finance to misrepresent and fail to disclose the insider sales in reports furnished to the SEC and investors.

Further, the indictment alleges that Singhal, using nominee entities, entered into agreements with Xinhua Finance to earn commissions for introducing transactions to Xinhua Finance. Singhal, through those nominees, obtained approximately $7.9 million from Xinhua Finance. Singhal directed $1.8 million of those proceeds to Bush through other nominee accounts. The indictment alleges that Singhal used the nominees for purposes of, among other things, avoiding the obligation of Xinhua Finance to disclose publicly a related party transaction.

Three others earlier pleaded guilty to charges in the investigation.

An indictment is merely an allegation that a defendant has committed a violation of criminal law and is not evidence of guilt. Every defendant is presumed innocent until, and unless, proven guilty in a court of law.

In announcing the charges, Acting U.S. Attorney Okun and Assistant Director McJunkin praised the investigative efforts of the Special Agents of the FBI’s Washington Field Office and also recognized the work of U.S. Attorney’s Office Paralegal Specialists Tasha Harris and Mary Treanor, Forensic Accountant Crystal Boodoo and Legal Assistants Jared Forney and Krishawn Graham. Finally. They commended the efforts of Assistant U.S. Attorneys Michael K. Atkinson, Vasu B. Muthyala and Matthew Graves, who are prosecuting the case.


Faro Technologies Inc. Agrees to Pay $1.1 Million Penalty and Enter Non-Prosecution Agreement for FCPA Violations

WASHINGTON – Faro Technologies Inc. (Faro), a public company that specializes in computerized measurement devices and software, agreed to pay a $1.1 million criminal penalty in connection with corrupt payments to Chinese government officials in violation of the Foreign Corrupt Practices Act (FCPA), Acting Assistant Attorney General for the Criminal Division Matthew Friedrich announced today.

Faro, headquartered in Lake Mary, Fla., develops and markets portable computerized measurement devices and software to perform three-dimensional inspections of parts, assemblies and machines for the manufacturing sector, including the automotive, aerospace and consumer goods industries. According to the statement of facts, Faro began direct sales of its products in China in 2003 through its subsidiary, Faro China, which is based in Shanghai. On several occasions in 2004 and 2005, a Faro employee authorized other Faro employees to make corrupt payments, termed “referral fees” within Faro, directly to employees of state-owned or controlled entities in China to secure business for Faro. According to the statement of facts, in 2004 and 2005 Faro promised to make and did make corrupt payments disguised as referral fees to secure contracts worth approximately $4.9 million.

The statement of facts also reveals that certain Faro employees decided in 2005 to route the corrupt payments to Chinese government officials through a shell company to “avoid exposure,” according to internal e-mails. As a result, in January 2005 Faro China entered into a bogus services contract with an intermediary, using it to pay the bribes on behalf of Faro. The intermediary aggregated the bribe payments it paid on behalf of Faro and sent regular invoices to Faro for payment based on its services contract.

Faro also falsely recorded at least $238,000 in improper payments in its books and records, inaccurately describing the bribe payments as referral fees. Also, between approximately May 2003 and February 2006, Faro failed to devise and maintain a system of internal controls with respect to foreign sales activities sufficient to ensure compliance with the FCPA.

In recognition of Faro’s voluntary disclosure and thorough review of the improper payments, its cooperation with the Department’s investigation, the company’s implementation of and commitment to implement in the future enhanced compliance policies and procedures, and the company’s agreement to engage an independent corporate monitor, the Department has agreed to enter into a non-prosecution agreement with a term of two years. If Faro abides by the terms of that agreement, the Department will not prosecute Faro for the conduct admitted in the statement of facts.

In a related matter, the Securities and Exchange Commission (SEC) today instituted a settled enforcement action against Faro. Faro consented to the entry of a cease and desist order and agreed to pay approximately $1.85 million in disgorgement and prejudgment interest in connection with conduct similar to that described above.


Department of Justice Seeks to Recover Approximately $3 Million in Illegal Proceeds from Foreign Bribe Payments

WASHINGTON – The Department of Justice has filed a forfeiture action against accounts worth nearly $3 million that are alleged to be the proceeds of a wide-ranging conspiracy to bribe public officials in Bangladesh and their family members in connection with various public work projects, Acting Assistant Attorney General Matthew Friedrich of the Criminal Division announced today.

The forfeiture action was filed Jan. 8, 2009, in U.S. District Court in the District of Columbia against funds located in Singapore held by multiple account holders. The forfeiture complaint relates primarily to alleged bribes paid to Arafat "Koko" Rahman, the son of the former prime minister of Bangladesh, in connection with public works projects awarded by the government of Bangladesh to Siemens AG and China Harbor Engineering Company. According to the forfeiture complaint, the majority of funds in Koko’s account are traceable to bribes allegedly received in connection with the China Harbor project, which was a project to build a new mooring containment terminal at the port in Chittagong, Bangladesh.

"This action shows the lengths to which U.S. law enforcement will go to recover the proceeds of foreign corruption, including acts of bribery and money laundering," said Acting Assistant Attorney General Matthew Friedrich. "Not only will the Department, for example, prosecute companies and executives who violate the Foreign Corrupt Practices Act, we will also use our forfeiture laws to recapture the illicit facilitating payments often used in such schemes."

Siemens Aktiengesellschaft (Siemens AG), a German corporation, and three of its subsidiaries pleaded guilty on Dec. 15, 2008, to violations of and charges related to the Foreign Corrupt Practices Act (FCPA). Specifically, Siemens Bangladesh admitted that from May 2001 to August 2006, it caused corrupt payments of at least $5,319,839 to be made through purported business consultants to various Bangladeshi officials in exchange for favorable treatment during the bidding process on a mobile telephone project. At least one payment to each of these purported consultants was paid from a U.S. bank account.

According to the forfeiture complaint, the bribe payments from Siemens AG and China Harbor Engineering Company were made in U.S. dollars, and the illicit funds flowed through financial institutions in the United States before they were deposited in accounts in Singapore, thereby subjecting them to U.S. jurisdiction. Money laundering laws in the United States cover financial transactions that flow through the United States involving proceeds of foreign offenses, including foreign bribery and extortion.

In August 2006, the President announced a National Strategy to Internationalize Efforts Against Kleptocracy to fight high-level corruption around the world. This strategy combines the policy and law enforcement tools of several federal agencies, including the Departments of Justice, Treasury, State and Homeland Security.


SEC Charges California Telecom Company With Bribery and Other FCPA Violations FOR IMMEDIATE RELEASE 2009-277

Washington, D.C., Dec. 31, 2009 — The Securities and Exchange Commission today charged Alameda, Calif.-based telecommunications company UTStarcom, Inc. with violations of the Foreign Corrupt Practices Act (FCPA) for authorizing millions of dollars in unlawful payments to foreign government officials in Asia. Additional Materials

Litigation Release No. 21357 SEC Complaint

UTStarcom agreed to settle the SEC's charges and pay a $1.5 million penalty among other remedies. In a related criminal case, the U.S. Department of Justice announced today that UTStarcom agreed to pay an additional $1.5 million fine.

"UTStarcom spent millions of dollars on illegal bribes to win and keep customers in Asia," said Marc J. Fagel, Director of the SEC's San Francisco Regional Office. "It is important for corporate America to recognize that resorting to these methods of boosting profits contributes to a culture of corruption that cannot be condoned under U.S. law."

The SEC's complaint, filed in the U.S. District Court for the Northern District of California, alleges that UTStarcom's wholly-owned subsidiary in China paid nearly $7 million between 2002 and 2007 for hundreds of overseas trips by employees of Chinese government-controlled telecommunications companies that were customers of UTStarcom, purportedly to provide customer training. In reality, the trips were entirely or primarily for sightseeing.

The SEC further alleges that UTStarcom provided lavish gifts and all-expenses paid executive training programs in the U.S. for existing and potential foreign government customers in China and Thailand. UTStarcom also purported to hire individuals affiliated with foreign government customers to work in the U.S. and provided them with work visas, when in reality the individuals did no work for UTStarcom. According to the SEC's complaint, UTStarcom also made improper payments to sham consultants in China and Mongolia while knowing that they would pay bribes to foreign government officials.

The SEC's complaint charges UTStarcom with violations of the anti-bribery, books and records, and internal controls provisions of the FCPA. UTStarcom agreed, without admitting or denying the charges, to the entry of a permanent injunction against FCPA violations and to provide the SEC with annual FCPA compliance reports and certifications for four years, in addition to paying the $1.5 million penalty.

The SEC acknowledges the assistance of the Department of Justice during the investigation.


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As an United States Multinational Corporation Illegal Bribe Whistleblower Bounty Lawyer and United States SEC Multinational Illegal Kickback Whistleblower Reward Lawyer, Jason S. Coomer commonly works with other powerful illegal international business contract bribe whistleblower lawyers and illegal contract kickback whistleblower lawyers to handle large Chinese Multinational Corporation Bribe Whistleblower Bounty Lawsuits, SEC Multinational Corporation China Business Illegal Bribe Whistleblower Reward Lawsuits, Multinational Oil Company Chinese Illegal Kickback Whistleblower Bounty Actions, Chinese Commodity Fraud Bounty Lawsuits, and other Foreign Corrupt Practices Act China Whistleblower Reward Lawsuits. 

If you are aware of illegal international trade practices including violations of the Foreign Corrupt Practice Act (FCPA) by a multinational corporation in China or a Chinese corporation in another country, please feel free to contact China Customs Agent Bribe Whistleblower Lawyer and Chinese International Business Illegal Bribe Whistleblower Reward Lawyer Jason Coomer via e-mail message  or use our submission form to have a foreign corrupt practices act attorney review a potential China Business Bribe Bounty Reward Action, Chinese Customs Agent Whistleblower Lawsuit, Chinese Government Official Construction Contract Bribe Whistleblower Bounty Action, Foreign Corrupt Practices Act Violation Whistleblower Reward Lawsuit, or other Foreign Corruption Practices Act Securities and Exchange Commission Bounty Action.   

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