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Pharmaceutical anti-corruption: should the use of funds through false invoicing for bribery be punished as one or several offenses?

The core objective of this centralized action in the pharmaceutical industry is to combat corruption and bribery in medical service institutions, and a number of hospital directors and doctors have been investigated and punished for accepting bribes. Due to the fact that bribery and bribery are joint crimes, the Commission for Discipline Inspection and Supervision of the Supreme Prosecutor, the Supreme Court and other relevant departments have issued the "Opinions on Further Promoting the Investigation of Bribery and Bribery Together", emphasizing that "bribery and bribery are investigated together", and that bribe-taking is seriously punished. The recently published Amendment (XII) to the Criminal Law (Draft) also proposes to increase the penalties for active bribery. In the pharmaceutical industry, bribery funds are usually obtained through false invoices, investigate and deal with bribery is bound to implicate the false invoicing behavior, then the question is, whether the false invoicing and bribery constitutes a guilt by association, from a heavy penalty; or to the punishment of a number of crimes. The author combined with the current relevant provisions and judicial practice, from the criminal law theory to be analyzed for the reader's reference.

I. Pharmaceutical anti-corruption: corruption and false invoicing behavior is highly correlated and inseparable

(I) Insisting on active and passive bribery to be investigated together, and Amendment (XII) to the Criminal Law proposes to increase the penalty for active bribery

In September 2021, the Central Commission for Discipline Inspection of the State Supervisory Committee, jointly with the Ministry of Organization, the Ministry of United Front Work, the Political and Legal Committee, the Supreme Court, the Supreme Prosecutor issued the "Opinions on Further Promoting the Investigation of Active and Passive Bribery Together", which made a deployment of further promoting the investigation of active and passive bribery together, pointing out that it is necessary to resolutely investigate and deal with acts of active bribery, including the implementation of major commercial bribery.

On July 25, 2023, the draft amendment (XII) to the Criminal Law was first submitted to the Standing Committee of the National People's Congress (NPC) for deliberation, highlighting the increase in penalties for active bribery: the penalty for the crime of active bribery of a unit was revised from the original maximum sentence of five years' fixed-term imprisonment to "fixed-term imprisonment of not more than three years or criminal detention, and a fine" and "three to ten years of fixed-term imprisonment and a fine". At the same time, the provisions of the crime of active bribery have been improved, and it is clearly stipulated that repeated bribery, bribery in the field of food and drugs, and the use of illegal proceeds for bribery are aggravating circumstances.

It can be said that this amendment to the criminal law refers to the pharmaceutical industry, pharmaceutical enterprises to false opening of the illegal proceeds of bribery, will be directly offended by the two aggravating circumstances, bribery of the criminal responsibility is very heavy.

(II) Jiangxi High Court, "Jiangxi Province, the high incidence of crime risk prevention and control guidelines for enterprises," the provisions of the heavy punishment from one to another.      

In 2020, the Jiangxi Provincial Higher People's Court issued the "Guidelines for Prevention and Control of High Crime Risks of Enterprises in Jiangxi Province", which states:"(iv) the crime of false invoicing 2. Enterprises shall not purchase or falsely issue ordinary invoices at a low price to overstate the costs and reduce the amount of taxes, such as income tax, paid by the enterprise, or take advantage of the differences in the tax rates of different industries in order to evade taxes; and they shall not charge expenditures through the purchase of false ordinary invoices, which shall be used for bribery or transfer of benefits in business transactions. The implementation of the above acts at the same time violated the crime of false invoicing and tax evasion, unit bribery and other crimes, will be based on the circumstances of their crimes to choose a felony to be punished severely."

Then, according to the provisions of the Jiangxi High Court, bribery and false invoicing constitute an implicated offense. This provision is in line with the criminal law theory, because the funds for bribe are often extracted through false invoicing, and false invoicing is only a means of bribery, which is an integral part of the whole bribery crime and should not be evaluated separately.

(III) Summary and problems: judicial practice is not unified

After the reform of the "two-ticket system", the middle of the ticket link layers of price increases to extract funds for bribery can not be implemented, pharmaceutical enterprises to collude with cso, cmo and other organizations to increase the promotion fee, service fees and other sales costs of false invoices to extract funds for bribery. With the advancement of anti-corruption work, the investigation and handling of bribery found that tax-related issues are very likely to be directly transferred to the public security, increasing the possibility that the tax administrative risk of pharmaceutical enterprises will be transformed into a criminal risk.

Combined penalties for several offenses will result in a higher sentence compared to a heavier sentence. That is, the sentence to be executed for several offenses should be below the sum total sentence and above the maximum sentence in several sentences, and the sentence to be executed should be decided at discretion. Therefore, if it can be recognized as a guilt by association from a heavy punishment, for the defendant is more favorable. However, despite the above Jiangxi High Court documents that false opening and bribery should constitute a guilt by association, there are still a large number of cases in practice to several crimes and penalties. This paper selects part of the "false opening + bribery" case for analysis, and for the defense of the defendant to put forward the corresponding recommendations. 

II. Judicial cases: mixed results in the adjudication of fraudulent invoicing to obtain funds for bribery

(I) Zheng Mou's case of false invoicing and unit bribery: only the crime of bribery was convicted.

Zhengzhou a pharmaceutical company and a biological company were established in 2008 and 2010, the actual controller is Zheng. Zheng Mou in 2014 to 2016 as a pharmaceutical company in Zhengzhou legal representative, to the People's Liberation Army, a hospital sales of goods obtained more than 8.53 million yuan, in order to pay less tax, to take a "big head, small tail way" false general machine-printed invoices, under-declaration of income more than 8,090,000 yuan. 2013, in order to make a biological company in the sale to a hospital in Zhengzhou, a biological company in the sale to a hospital in Zhengzhou, the company was convicted of bribery only, the unit bribe. In 2013, in order to enable a biological company to sell ultrasound focused uterine fibroid treatment system to a hospital in Zhengzhou won the bid, three times to the hospital director Liu bribe a total of 800,000 yuan. 2018, Zheng Mou by the Tax Inspection Bureau transferred to the public security, to the case after the confession of the facts of the violation.

In this case, the "big head, small tail" false invoicing mode refers to Zheng Mou in the invoicing, delivered to the purchaser of a hospital of the People's Liberation Army invoices recorded the true amount, but its tampering with the bookkeeping use of the bookkeeping, the stub coupon, the amount of the change to a smaller amount, so that in the bookkeeping of the undercounting of income. The defense argued that "big head, small tail" is essentially tampering with the original vouchers, bookkeeping vouchers of tax evasion, does not belong to the false invoicing, the court supported the defense's point of view, because the tax evasion crime has the administrative preemptive reasons, a pharmaceutical company has paid back the tax and late fees, therefore does not constitute a crime, the judgment of a pharmaceutical company and Zheng does not constitute the false invoicing crime; that a biological company, a biological company, a hospital recorded the true amount, but it changed the amount to a smaller amount, thus undercounting the income when recording. invoicing crime; that a biological company and Zheng Mou in order to seek undue benefits, giving kickbacks to state staff, constituting the crime of unit bribery, the company was sentenced to a fine of RMB 100,000 yuan, Zheng Mou sentenced to nine months of imprisonment and a fine of 100,000 yuan.

(II) Li Moujie bribery of non-state staff, false invoicing case: not identified goods, insufficient evidence of false invoicing

Defendant Li Moujie Department of Tonglu a medical company's legal representative, during the period from 2015 to 2018, in order to seek benefits, take the bank wechat transfer and other ways to the former Lankao County medical group assets department minister Jia Mou and the relevant medical units responsible for bribes totaling more than 63,000 yuan. Defendant Xu Mou is the actual operator of a medical device company, during the period from 2012 to 2016, through Li Moujie contacted three medical device companies in Jiangxi to issue invoices for him to the hospitals under the Lankao County Medical Group, a total of 35 invoices, with a ticket amount of 4,960,177.5 yuan.

The court held that Li Moujie, in order to seek undue benefits, paid bribes to the staff of non-state organs, and his behavior has constituted the crime of paying bribes to non-state staff, and sentenced him to one year and two months of imprisonment and a fine of 10,000 yuan; it held that the evidence submitted by the public prosecutor's office was insufficient to prove that there was no real transaction of goods between Xu Moujie and the hospitals, and that there was an act of issuing ordinary invoices of an inaccurate quantity or amount, and found that Li Moujie and Xu Mou do not constitute the crime of false invoicing. In addition, the case also disclosed in detail the defendant Jia Mou in the former Lankao County Medical Group Asset Management Department during the minister, repeatedly accepting and group business-related medical equipment supplier Li Moujie red packets of bribery, bribery amount totaling 63,000 yuan.

(III) The case of Jin Mouhua's false invoicing and bribery of a unit: combined punishment for several offenses

In March 2009, Yanbian a medical limited company and Yanbian second people's hospital signed a "health material supply" agreement. In order to strengthen the cooperation with the hospital, the defendant JinMouHua and YanBian a medical limited company of the real controller JinMouMou, accountant JinMou2 conspired, to advertisement fee, handling fee, maintenance fee, transportation fee, etc. in the name of false invoicing to the medical company's funds 5411445.00 yuan, by the JinMouHua in the company's name to the second people's hospital of yanbian relevant department of bribe 1772832.00 yuan. The relevant facts of the offense are proved by relevant witness testimony, documentary evidence and other evidence, and the defendant Jin Mouhua has no objection to this.

In the end, the court convicted and sentenced the company for the crimes of bribery and false invoicing. Jin Mouhua, as a directly responsible supervisor, was sentenced to one year's fixed-term imprisonment and a fine of RMB150,000 for the crime of bribery, one year's fixed-term imprisonment and a fine of RMB100,000 for the crime of false invoicing, and was sentenced to a combined fixed-term imprisonment of one year and six months, with a probationary period of three years, and was punished with a fine of RMB200,000 for the crime of bribing the unit.

(IV) Summary

From the above cases, it can be seen that bribery investigation will be bribery behavior, bribery will also be implicated in bribery, at the same time, in the tax authorities audit tax evasion, false invoicing tax violations transferred to the public security situation, the suspect is usually in a high-pressure state or for meritorious mitigation of punishment to choose to truthfully confess that the judicial authorities have not yet grasped the facts of the crime of bribery, or in the public security organs of the investigation found that the funds of the false invoices are used for bribery. The direction of the funds is used for bribery, often will also be false invoicing and bribery of the crime of investigation and punishment.

In summary, no matter under what circumstances, the medical industry related companies and persons in charge of the hospital side, the enterprise side of a number of persons in charge of the hospital side has been retained, was filed for investigation, was reported under the background of the continued anti-corruption, the bribery of false invoicing and other criminal risks have increased dramatically, to remind the medical field of the enterprise to seize the time to self-check the existence of tax evasion, false invoices and other illegal and irregular tax behaviors, if there is as soon as possible in the self-checking phase After the adoption of Amendment (XII) to the Criminal Law, the maximum penalty for unit bribery is 7 years of imprisonment; bribery provides for three levels of imprisonment, with a maximum of life imprisonment, and the crime of false invoicing provides for two levels of imprisonment, with a maximum of 7 years of imprisonment, and the crime of false issuance of VAT special invoices provides for three levels of imprisonment, with a maximum of life imprisonment. If tax-related criminal offenses and bribery are involved in two acts of crime, if the court is sentenced to several crimes the penalty is higher than one crime or is from a felony punishment. Therefore, if you enter the criminal stage, you need to find favorable defense points from it, and strive for acquittal or misdemeanor.

III. Our Interpretation: Defense Strategies for Fraudulent Invoicing and Bribery

Through the author's retrieval of judicial cases and the analysis of tax-related cases on behalf of the team, whether the false invoicing constitutes a crime, there is a space for defense, and bribery because of bribery and bribery is a joint crime, in general, the evidence of bribery can be used to prove bribery, so the high incidence of commercial bribery in the field of medicine enterprises along with the risk of false invoicing is interlinked with each other, starting from the tax aspects of the defense, it is more advantageous.

(I) dependence behavior does not constitute the crime of false invoicing according to law

If the Contractor is the taxpayer, the Contractor shall be the taxpayer. Otherwise, the contractor is the taxpayer." It can be seen that the dependent behavior has a legal status, the dependent business refers to the enterprise or other subjects and another business subject to reach a dependency agreement, the dependent party is usually in the name of the dependent party to engage in external business activities, the dependent party to provide qualifications, management and other aspects of the service and by the dependent party regularly to the dependent party to pay a certain amount of profit or cost of the mode of operation. The reason why the tax law recognizes the dependent behavior, is that although the dependent party in the name of the dependent party to carry out external business, but the dependent party to implement the civil legal acts of the legal risks and liabilities are borne by the dependent party, therefore, the tax law inherited the logic of private law, by the dependent person to assume the obligation to pay taxes, and the dependent behavior does not disrupt the invoice management system. In the case of Li Moujie false invoicing, the court also recognized the defense articulated by the defense of the dependency relationship, because the public prosecutor can not prove that there is really no goods transactions, accordingly, Li Moujie is not constituted by the crime of false invoicing.

Therefore, under the premise of real goods transactions, the existence of dependency relationship, does not constitute the crime of false invoicing. It is worth noting that the crime of false invoicing is different from the crime of false VAT invoicing, which also requires the loss of national VAT tax.

(II) tampering with invoice data, false declaration should be punished for tax evasion

In the case of Zheng Mou false invoicing, false invoicing and bribery are the behavior of Zheng Mou for the benefit of different companies, if Zheng Mou false invoicing crime is established, it should be punished with the crime of bribery. In this case, the general machine-printed invoices are usually used for small-scale taxpayers, the use of invoicing software, rather than the tax-control system, so you can take a "big head, small tail", also known as the invoice set of openings, can be in the stub and bookkeeping joints to make the amount of money to become smaller, so as to pay less tax, therefore, essentially belongs to forgery, fabrication, and the crime of false invoicing is not punishable. Therefore, it is essentially a forgery, fabrication of original documents, bookkeeping documents to achieve the purpose of tax evasion by paying less tax, tax evasion offense. However, because of the tax evasion crime stipulates that "after the tax authorities issued a notice of recovery according to law, make up the tax due, pay late fees, and have been subject to administrative penalties, shall not be held criminally liable; however, within five years for evading the payment of taxes have been subjected to criminal penalties or by the tax authorities to give more than two times the administrative penalties, except for the administrative violation of the reasons for the blocking. The administrative violation of the blocking subject matter, the suspect in the presence of such circumstances, as soon as possible, the amount of tax evaded and late payment fees to make up the amount of tax evaded, to avoid the criminal risk of tax-related crimes. The defense can adopt such strategies to fight for the innocence of the criminal suspects.

(III) false invoicing and bribery are implicated, and should be punished as a felony.

In the case of Jin Mouhua false invoicing, bribery to the unit, Jin Mouhua through the false invoicing of funds for bribery, by the court of several crimes, the author believes that there is a lack of proper, the means and purpose of this kind of way of crime behavioral relationship, belongs to the crime of guilt by association. First of all, Jin Mouhua in order to strengthen cooperation with the hospital, there are motives to the hospital bribe, the reason why a variety of false invoicing is to set out to the hospital to take out the funds of bribery, Jin Mouhua implementation of false invoicing behavior and bribes to the hospital side of the two independent criminal behavior, subjectively in line with the necessary subjective elements of guilt, that is, the number of acts between the same purpose of the crime; Second, Jin Mouhua false invoicing to take out funds and the hospital side of bribery, the means and purpose of the crime, belongs to the guilt. Secondly, Jin Mouhua false invoices to obtain funds and bribes to the hospital, there is also an inseparable means and purpose of the objective relationship between the former false invoices to obtain funds constitute part of the act of bribery, this is because, if not to false invoices to obtain funds, bribery funds can not come out of thin air, and the latter bribery constitutes the means and the end of the relationship between the means and the end of the act of bribery, in line with the objective requirements of the crime of guilt by association. Therefore, to fraudulent invoices to extract funds to pay bribes, should choose a felony punishment, several crimes will lead to excessive sentencing, not in line with the leniency of the criminal policy.

The aforementioned in jiangxi high court issued enterprise suspected of false invoicing crime risk prevention and control guidelines, in the false invoicing crime under the guidelines pointed out that "enterprises shall not be through the purchase of false ordinary invoices for expenditures, used in business transactions for bribery or transfer of benefits, the implementation of the above behaviors at the same time violated the false invoicing crime and tax evasion, bribery, etc., will be based on the circumstances of the crime to select a felony and be punished severely." Therefore, the viewpoint of Jiangxi High Court also proves the author's point of view.

In summary, once the pharmaceutical enterprises involved in criminal risk, should also be timely to choose a more favorable way to defend, based on the facts, under the principle of the law, in order to achieve the legal effect of misdemeanor or even innocent.

IV.Compliance advice: how to avoid the risk of false invoicing

From the viewpoint of the court in criminal cases of false invoicing, the existence of business authenticity is one of the facts that the court focuses on ascertaining. Therefore, in the process of carrying out business, pharmaceutical enterprises should take the real business as the basis, and keep the minutes, contracts, documents, original vouchers, bookkeeping vouchers and other information generated in the process of carrying out business in the archives, and at the same time, focus on the verification of the necessity and reasonableness of the academic conference and promotion expenses, and make horizontal and vertical comparisons of the price of the transaction, so that once they are involved in the risk of tax-related risks, whether in the tax audit stage or administrative and criminal stage, they can be used as favorable evidence to defend themselves. Once involved in tax-related risks, it can be used as favorable evidence for defense, whether in the tax audit stage or administrative or criminal stage. Secondly, according to its own situation, it can establish an invoice management information database, conduct a comprehensive review of the qualifications of upstream and downstream enterprises, and verify and validate the invoices submitted by its employees. In addition, it will regularly conduct self-inspection of invoices, and verify the invoices as soon as possible if there are any abnormalities; if it is proved to be a fraudulent invoice, it should remedy the problem in a timely manner, and turn out its own inputs, so as to avoid the expansion of the subsequent risks. Finally, it is recommended that pharmaceutical companies build a business model that separates purchasing and selling to form a risk isolation zone.

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