II 118th CONGRESS 1st Session S. 151 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 Republic of China, and for other purposes.

1. Short title This Act may be cited as the Countering Corporate Corruption in China Act of 2023 . 2. Findings Congress finds the following: (1) In section 1 of the National Security Study Memorandum issued on June 3, 2021 (relating to establishing the fight against corruption as a core United States national security interest), President Joseph R. Biden, Jr., established countering corruption as a core United States national security interest. (2) The practices of the Chinese Communist Party, the Government of the People’s Republic of China, and instrumentalities of the Government of the People’s Republic of China pose a unique challenge to the enforcement of section 30A of the Securities Exchange Act of 1934 ( 15 U.S.C. 78dd–1 ) and sections 104 and 104A of the Foreign Corrupt Practices Act of 1977 ( 15 U.S.C. 78dd–2 , 78dd–3) (referred to collectively in this section as the corporate anti-corruption laws ). (3) The Chinese Communist Party, the Government of the People’s Republic of China, and instrumentalities of the Government of the People’s Republic of China routinely frustrate the enforcement of the corporate anti-corruption laws by leveraging access to the markets of the People’s Republic of China to cause companies that are subject to the corporate anti-corruption laws to improperly provide valuable benefits to those entities in the form of principally nonmonetary actions (referred to collectively in this section as corporate actions currying favor with the Chinese Communist Party ), which include— (A) the hiring, promotion, or retention of Chinese Communist Party officials and children of those officials, such as the unlawful practices admitted to by certain entities subject to the corporate anti-corruption laws in what are commonly known as the princelings settlements; (B) political advocacy on behalf of the goals and policies of the Chinese Communist Party in the People’s Republic of China, the United States, and the rest of the world, including by— (i) assisting in the denial, obfuscation, or excusal of— (I) genocide and other atrocities committed by the Chinese Communist Party, the Government of the People’s Republic of China, and instrumentalities of the Government of the People’s Republic of China; (II) the extrajudicial detainment, subjection to forced labor, torture, and political indoctrination of, and other severe human rights abuses with respect to, Uyghurs, Kazakhs, Kyrgyz, and members of other predominantly Muslim ethnic groups by the Government of the People’s Republic of China in the Xinjiang Uyghur Autonomous Region of China (or comparable treatment of members of other ethnic, religious, and political groups who reside elsewhere in the People’s Republic of China); (III) censorship or other activities with respect to Hong Kong that— (aa) prohibit, limit, or penalize the exercise of freedom of expression or assembly by the citizens of Hong Kong; or (bb) limit access to free and independent print, online, or broadcast media; and (IV) the extrajudicial rendition, arbitrary detention, or torture of any individual in Hong Kong or other gross violations of internationally recognized human rights in Hong Kong; and (ii) supporting, legitimizing, or recognizing the unlawful territorial claims of the Government of the People’s Republic of China in Taiwan, Tibet, Korea, the South China Sea, the East China Sea, and other locations in which such claims are contested; and (C) investments without reasonable business purposes in industries targeted for support by the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China, including by entering into a joint venture with such an instrumentality or an entity affiliated with such an instrumentality. (4) Corporate actions currying favor with the Chinese Communist Party are valuable to officials of the Chinese Communist Party, the Government of the People’s Republic of China, and instrumentalities of the Government of the People’s Republic of China, and constitute payments of value for the purposes of subsection (a) of each of the corporate anti-corruption laws, because those actions are— (A) directly or indirectly financially valuable to those officials due to— (i) the extent of corruption in the People’s Republic of China; (ii) the reliance of the economy of the People’s Republic of China on state-owned enterprises; and (iii) the integration of the party-state with business enterprises in the People’s Republic of China; and (B) valuable to the interests of the Chinese Communist Party, and officials of that Party, in a manner that is distinct from any independent economic or public interest rationale for those actions. (5) Corporate actions currying favor with the Chinese Communist Party are taken corruptly for the purposes of each of the corporate anti-corruption laws because those actions— (A) have no reasonable business purpose unrelated to obtaining or retaining business within the People’s Republic of China and instead relate to— (i) accessing markets within the jurisdiction of the People’s Republic of China; or (ii) avoiding injury threatened by the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China; and (B) are morally wrongful to the extent that those actions contribute to denying, obfuscating, or excusing— (i) genocide and other atrocities; and (ii) the extrajudicial detainment, subjection to forced labor, torture, and political indoctrination of, and other severe human rights abuses with respect to, individuals by the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China. (6) Despite the public and prominent undertaking of corporate actions currying favor with the Chinese Communist Party by individuals and entities that are subject to the corporate anti-corruption laws, the Federal Government has undertaken little enforcement with respect to those corporate actions due to an apparent difficulty in demonstrating that the actions are corrupt, or of value to a foreign official, because of the principally nonmonetary nature of those actions. (7) In addition to undermining the public interest in the enforcement of the corporate anti-corruption laws in the manner described in paragraphs (2) through (6), corporate actions currying favor with the Chinese Communist Party undermine the public interest in the enforcement of the laws of the United States, including— (A) sections 4 and 5 of the Act entitled An Act to ensure that goods made with forced labor in the Xinjiang Autonomous Region of the People’s Republic of China do not enter the United States market, and for other purposes , approved December 23, 2021 ( Public Law 117–78 ; 135 Stat. 1525) (referred to in this section as the Uyghur Forced Labor Prevention Act ) (including the amendment made by section 5 of that Act), by— (i) reducing the awareness of entities subject to, or potentially subject to, that Act regarding the application of that Act to activities in the Xinjiang Autonomous Region of the People’s Republic of China or elsewhere in the People’s Republic of China; (ii) aiding and abetting violations of that Act; and (iii) reducing the information available to law enforcement officials in the United States regarding the activities described in clause (i); and (B) United States sanctions laws with respect to persons and entities in the People’s Republic of China (collectively referred to in this section as the sanctions laws of the United States )— (i) including— (I) section 1237 of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 ( Public Law 105–261 ; 50 U.S.C. 1701 note); (II) sections 4 and 5 of the Uyghur Forced Labor Prevention Act (including the amendment made by section 5 of that Act); (III) the Global Magnitsky Human Rights Accountability Act (subtitle F of title XII of Public Law 114–328 ; 22 U.S.C. 2656 note); (IV) Executive Order 13818 ( 50 U.S.C. 1701 note; relating to blocking the property of persons involved in serious human rights abuse or corruption), as amended on or after the date of enactment of this Act; (V) Executive Order 13959 ( 50 U.S.C. 1701 note; relating to addressing the threat from securities investments that finance Communist Chinese military companies), as amended before, on, or after the date of enactment of this Act and as superseded in part before, on, or after the date of enactment of this Act; and (VI) Executive Order 14032 ( 50 U.S.C. 1701 note; relating to addressing the threat from securities investments that finance certain companies of the People’s Republic of China), as amended before, on, or after the date of enactment of this Act; and (ii) by facilitating investment in, or transactions with, entities in which investment is, or with which transactions are, prohibited under the sanctions laws of the United States by— (I) providing principally nonmonetary benefits of value to those entities, which, in turn, become financially valuable to those entities in a manner that is directly traceable to those benefits, such as with respect to raising capital from international capital markets; (II) investing in, or transacting with, entities not subject to the sanctions laws of the United States under circumstances that suggest that those entities will, in turn, invest in or transact with other entities that are subject to the sanctions laws of the United States; and (III) reducing the information available to law enforcement officials in the United States for the purpose of enforcing the sanctions laws of the United States. (8) The requirements of this Act, and the amendments made by this Act, are justified by— (A) the public interest in mitigating the threats to the enforcement of the corporate anti-corruption laws, and the sanctions laws of the United States, that are posed by the Chinese Communist Party, the Government of the People’s Republic of China, and instrumentalities of the Government of the People’s Republic of China; (B) the foreign policy interests achieved by this Act and the amendments made by this Act; and (C) the fact that those requirements— (i) are confined to the specific conduct of entities and persons subject to the corporate anti-corruption laws based on observable patterns of behavior demonstrated by those entities and persons; and (ii) do not subject any entity or person described in clause (i) to any criminal penalty. 3. Amendments regarding prohibited foreign trade practices (a) Issuers (1) In general Section 30A of the Securities Exchange Act of 1934 ( 15 U.S.C. 78dd–1 ) is amended— (A) in subsection (f), by adding at the end the following: (4) The term covered investment — (A) means any direct or indirect contribution or commitment of assets, including any— (i) acquisition of an equity interest or convertible equity interest; or (ii) loan or other debt interest; and (B) does not include a transaction in goods or services, or any related party transaction, with a wholly owned subsidiary of an entity— (i) that is incorporated in a jurisdiction of the United States; or (ii) the principal place of business of which is in the United States. ; and (B) by adding at the end the following: (h) Application For the purposes of this section— (1) an action that is taken corruptly includes an action that serves to— (A) deny, obfuscate, or excuse that a third party has committed, or assist a third party in committing— (i) the extrajudicial detainment, subjection to forced labor, torture, and political indoctrination of, and other severe human rights abuses with respect to, Uyghurs, Kazakhs, Kyrgyz, and members of other predominantly Muslim ethnic groups by the Government of the People’s Republic of China in the Xinjiang Uyghur Autonomous Region of China (or comparable treatment of members of other ethnic, religious, and political groups who reside elsewhere in the People’s Republic of China); (ii) censorship, or another activity, by the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China with respect to Hong Kong that— (I) prohibits, limits, or penalizes the exercise of freedom of expression or assembly by citizens of Hong Kong; or (II) limits access to free and independent print, online, or broadcast media; or (iii) the extrajudicial rendition, arbitrary detention, or torture of any individual in Hong Kong or other gross violations of internationally recognized human rights in Hong Kong; (B) support, legitimize, or recognize the territorial claims of the Government of the People’s Republic of China in Taiwan, Tibet, Korea, the South China Sea, the East China Sea, or another location in which such a claim is contested; (C) express political advocacy in favor of the Chinese Communist Party, the system of governance of that Party, or any official of that Party; or (D) make a covered investment— (i) in partnership with the Belt and Road Initiative of the Government of the People’s Republic of China; or (ii) in any entity (including a parent, subsidiary, or affiliate of, or another entity controlled by an entity) that is— (I) (aa) affiliated with the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China; and (bb) involved in the development, production, or sale of emerging or foundational technology identified pursuant to section 1758 of the Export Controls Act of 2018 ( 50 U.S.C. 4817 ); or (II) on the Entity List maintained by the Bureau of Industry and Security of the Department of Commerce and set forth in Supplement No. 4 to part 744 of title 15, Code of Federal Regulations; and (2) an action described in paragraph (1) is made with respect to a foreign official, or any foreign political party or official thereof, if, among other reasons, the action is taken in response to— (A) a request of any foreign official, or any foreign political party or official thereof, as applicable; (B) an injury or threat of injury, by means of economic coercion, to the applicable issuer, or to an officer, director, employee, or agent of the applicable issuer, made by any foreign official or any foreign political party or official thereof; or (C) a material action or announcement, including with respect to policy, by the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China from which the action would rationally follow. (i) Special rules Notwithstanding any other provision of this section, with respect to a violation of subsection (a) or (g) that is based on an action taken corruptly as described in any of subparagraphs (A) through (D) of subsection (h)(1)— (1) the affirmative defenses under subsection (c) shall not be available; (2) it shall be an affirmative defense to actions under subsection (a) or (g) that the payment, gift, offer, or promise of anything of value that was made, as of the date on which it was made, had a reasonable business purpose, which does not include a purpose relating to— (A) advertising, marketing, or public relations; or (B) entering into or obtaining any agreement, license, permit, or other arrangement with respect to market access to a jurisdiction of a government; (3) notwithstanding section 32— (A) only a penalty described in subsection (c)(1)(B) or (c)(2)(B) of that section may apply with respect to the violation; and (B) the minimum amount of the civil penalty assessed for the violation shall be 3 times the amount of the penalty described in subsection (c)(1)(B) or (c)(2)(B) of that section, as applicable; and (4) in an action brought with respect to the violation, evidence that the action taken by the applicable issuer (or the officer, director, employee, or agent of the issuer, or stockholder acting on behalf of such issuer) was directly or indirectly inconsistent with the policies of the issuer, including any representation to the Federal Government by the issuer, shall be admissible to prove that the action taken by the issuer (or officer, director, employee, agent, or stockholder) was taken corruptly for the purposes of subsection (a) or (g), as applicable. . (2) Rule of construction Nothing in subsection (h) of section 30A of the Securities Exchange Act of 1934 ( 15 U.S.C. 78dd–1 ), as added by paragraph (1) of this subsection, may be construed to expand the meaning of the term corruptly , to any foreign official , or to any foreign political party or official thereof for the purposes of such section 30A, except for the clarification that the term includes an action that is taken as described in paragraph (1) or (2) of such subsection (h), as applicable. (b) Domestic concerns (1) In general Section 104 of the Foreign Corrupt Practices Act of 1977 ( 15 U.S.C. 78dd–2 ) is amended— (A) in subsection (h), by adding at the end the following: (6) The term covered investment — (A) means any direct or indirect contribution or commitment of assets, including any— (i) acquisition of an equity interest or convertible equity interest; or (ii) loan or other debt interest; and (B) does not include a transaction in goods or services, or any related party transaction, with a wholly owned subsidiary of an entity— (i) that is incorporated in a jurisdiction of the United States; or (ii) the principal place of business of which is in the United States. ; and (B) by adding at the end the following: (j) Application For the purposes of this section— (1) an action that is taken corruptly includes an action that serves to— (A) deny, obfuscate, or excuse that a third party has committed, or assist a third party in committing— (i) the extrajudicial detainment, subjection to forced labor, torture, and political indoctrination of, and other severe human rights abuses with respect to, Uyghurs, Kazakhs, Kyrgyz, and members of other predominantly Muslim ethnic groups by the Government of the People’s Republic of China in the Xinjiang Uyghur Autonomous Region of China (or comparable treatment of members of other ethnic, religious, and political groups who reside elsewhere in the People’s Republic of China); (ii) censorship, or another activity, by the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China with respect to Hong Kong that— (I) prohibits, limits, or penalizes the exercise of freedom of expression or assembly by citizens of Hong Kong; or (II) limits access to free and independent print, online, or broadcast media; or (iii) the extrajudicial rendition, arbitrary detention, or torture of any individual in Hong Kong or other gross violations of internationally recognized human rights in Hong Kong; (B) support, legitimize, or recognize the territorial claims of the Government of the People’s Republic of China in Taiwan, Tibet, Korea, the South China Sea, the East China Sea, or another location in which such a claim is contested; (C) express political advocacy in favor of the Chinese Communist Party, the system of governance of that Party, or any official of that Party; or (D) make a covered investment— (i) in partnership with the Belt and Road Initiative of the Government of the People’s Republic of China; or (ii) in any entity (including a parent, subsidiary, or affiliate of, or another entity controlled by an entity) that is— (I) (aa) affiliated with the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China; and (bb) involved in the development, production, or sale of emerging or foundational technology identified pursuant to section 1758 of the Export Controls Act of 2018 ( 50 U.S.C. 4817 ); or (II) on the Entity List maintained by the Bureau of Industry and Security of the Department of Commerce and set forth in Supplement No. 4 to part 744 of title 15, Code of Federal Regulations; and (2) an action described in paragraph (1) is made with respect to a foreign official, or any foreign political party or official thereof, if, among other reasons, the action is taken in response to— (A) a request of any foreign official, or any foreign political party or official thereof, as applicable; (B) an injury or threat of injury, by means of economic coercion, to the applicable domestic concern, or to an officer, director, employee, or agent of the applicable domestic concern, made by any foreign official or any foreign political party or official thereof; or (C) a material action or announcement, including with respect to policy, by the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China from which the action would rationally follow. (k) Special rules Notwithstanding any other provision of this section, with respect to a violation of subsection (a) or (i) that is based on an action taken corruptly as described in any of subparagraphs (A) through (D) of subsection (j)(1)— (1) the affirmative defenses under subsection (c) shall not be available; (2) it shall be an affirmative defense to actions under subsection (a) or (i) that the payment, gift, offer, or promise of anything of value that was made, as of the date on which it was made, had a reasonable business purpose, which does not include a purpose relating to— (A) advertising, marketing, or public relations; or (B) entering into or obtaining any agreement, license, permit, or other arrangement with respect to market access to a jurisdiction of a government; (3) notwithstanding any provision of subsection (g)— (A) only a penalty described in paragraph (1)(B) or (2)(B) of that subsection may apply with respect to the violation; and (B) the minimum amount of the civil penalty assessed for the violation shall be 3 times the amount of the penalty described in paragraph (1)(B) or (2)(B) of that subsection, as applicable; and (4) in an action brought with respect to the violation, evidence that the action taken by the applicable domestic concern (or the officer, director, employee, or agent of the domestic concern, or stockholder acting on behalf of such domestic concern) was directly or indirectly inconsistent with the policies of the domestic concern, including any representation to the Federal Government by the domestic concern, shall be admissible to prove that the action taken by the domestic concern (or officer, director, employee, agent, or stockholder) was taken corruptly for the purposes of subsection (a) or (i), as applicable. . (2) Rule of construction Nothing in subsection (j) of section 104 of the Foreign Corrupt Practices Act of 1977 ( 15 U.S.C. 78dd–2 ), as added by paragraph (1) of this subsection, may be construed to expand the meaning of the term corruptly , to any foreign official , or to any foreign political party or official thereof for the purposes of such section 104, except for the clarification that the term includes an action that is taken as described in paragraph (1) or (2) of such subsection (j), as applicable. (c) Persons other than issuers or domestic concerns (1) In general Section 104A of the Foreign Corrupt Practices Act of 1977 ( 15 U.S.C. 78dd–3 ) is amended— (A) in subsection (f), by adding at the end the following: (6) The term covered investment — (A) means any direct or indirect contribution or commitment of assets, including any— (i) acquisition of an equity interest or convertible equity interest; or (ii) loan or other debt interest; and (B) does not include a transaction in goods or services, or any related party transaction, with a wholly owned subsidiary of an entity— (i) that is incorporated in a jurisdiction of the United States; or (ii) the principal place of business of which is in the United States. ; and (B) by adding at the end the following: (g) Application For the purposes of this section— (1) an action that is taken corruptly includes an action that serves to— (A) deny, obfuscate, or excuse that a third party has committed, or assist a third party in committing— (i) the extrajudicial detainment, subjection to forced labor, torture, and political indoctrination of, and other severe human rights abuses with respect to, Uyghurs, Kazakhs, Kyrgyz, and members of other predominantly Muslim ethnic groups by the Government of the People’s Republic of China in the Xinjiang Uyghur Autonomous Region of China (or comparable treatment of members of other ethnic, religious, and political groups who reside elsewhere in the People’s Republic of China); (ii) censorship, or another activity, by the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China with respect to Hong Kong that— (I) prohibits, limits, or penalizes the exercise of freedom of expression or assembly by citizens of Hong Kong; or (II) limits access to free and independent print, online, or broadcast media; or (iii) the extrajudicial rendition, arbitrary detention, or torture of any individual in Hong Kong or other gross violations of internationally recognized human rights in Hong Kong; (B) support, legitimize, or recognize the territorial claims of the Government of the People’s Republic of China in Taiwan, Tibet, Korea, the South China Sea, the East China Sea, or another location in which such a claim is contested; (C) express political advocacy in favor of the Chinese Communist Party, the system of governance of that Party, or any official of that Party; or (D) make a covered investment— (i) in partnership with the Belt and Road Initiative of the Government of the People’s Republic of China; or (ii) in any entity (including a parent, subsidiary, or affiliate of, or another entity controlled by an entity) that is— (I) (aa) affiliated with the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China; and (bb) involved in the development, production, or sale of emerging or foundational technology identified pursuant to section 1758 of the Export Controls Act of 2018 ( 50 U.S.C. 4817 ); or (II) on the Entity List maintained by the Bureau of Industry and Security of the Department of Commerce and set forth in Supplement No. 4 to part 744 of title 15, Code of Federal Regulations; and (2) an action described in paragraph (1) is made with respect to a foreign official, or any foreign political party or official thereof, if, among other reasons, the action is taken in response to— (A) a request of any foreign official, or any foreign political party or official thereof, as applicable; (B) an injury or threat of injury, by means of economic coercion, to the applicable person, or to an officer, director, employee, or agent of the applicable person, made by any foreign official or any foreign political party or official thereof; or (C) a material action or announcement, including with respect to policy, by the Chinese Communist Party, the Government of the People’s Republic of China, or instrumentalities of the Government of the People’s Republic of China from which the action would rationally follow. (h) Special rules Notwithstanding any other provision of this section, with respect to a violation of subsection (a) that is based on an action taken corruptly as described in any of subparagraphs (A) through (D) of subsection (g)(1)— (1) the affirmative defenses under subsection (c) shall not be available; (2) it shall be an affirmative defense to actions under subsection (a) that the payment, gift, offer, or promise of anything of value that was made, as of the date on which it was made, had a reasonable business purpose, which does not include a purpose relating to— (A) advertising, marketing, or public relations; or (B) entering into or obtaining any agreement, license, permit, or other arrangement with respect to market access to a jurisdiction of a government; (3) notwithstanding any provision of subsection (e)— (A) only a penalty described in paragraph (1)(B) or (2)(B) of that subsection may apply with respect to the violation; and (B) the minimum amount of the civil penalty assessed for the violation shall be 3 times the amount of the penalty described in paragraph (1)(B) or (2)(B) of that subsection, as applicable; and (4) in an action brought with respect to the violation, evidence that the action taken by the applicable person was directly or indirectly inconsistent with the policies of the person, including any representation to the Federal Government by the person, shall be admissible to prove that the action taken by the person was taken corruptly for the purposes of subsection (a). . (2) Rule of construction Nothing in subsection (g) of section 104A of the Foreign Corrupt Practices Act of 1977 ( 15 U.S.C. 78dd–3 ), as added by paragraph (1) of this subsection, may be construed to expand the meaning of the term corruptly , to any foreign official , or to any foreign political party or official thereof for the purposes of such section 104A, except for the clarification that the term includes an action that is taken as described in paragraph (1) or (2) of such subsection (g), as applicable.