On Managers’ Loyalty Duty Of Chinese State-owned Enterprises In Overseas Investment

With the development of China’s market-oriented reform and economic globalization,more and more enterprises in China have begun to go out of the "national gate." The scale of China’s state-owned enterprises’ outbound investment has also increased,and the importance of overseas markets has become increasingly prominent for China’s state-owned enterprises.However,state-owned enterprises also faced a serious problem of loss of state-owned assets when investing overseas.The main reason for this problem is that the managers of state-owned enterprises take advantage of the long chain of overseas investment management,imperfect internal governance mechanism and insufficient external supervision to conduct improper related party transactions,bribes,accept "Commission" or kickbacks,usurp business opportunities and other acts.The managers violate managers’ loyalty duty of Chinese state-owned enterprises.It is an effective measure to enhance the transparency and legitimacy of state-owned enterprises’ operation and management,prevent and stop the loss of state-owned assets to strengthen the loyalty obligation of state-owned enterprises’ overseas investment managers,and to make full use of the company law,state-owned assets law of enterprises and other legal provisions to regulate the violation of loyalty obligation by managers.Therefore,in the specific context of overseas investment and operation of state-owned enterprises,this article studies the reasons for the violation of managers’ loyalty duty of Chinese state-owned enterprises in overseas investment,as well as some deficiencies in China’s current laws and regulations,and draws on the useful experience of the United States Foreign Corrupt Practices Act(FCPA),so as to improve the system of managers’ loyalty duty of Chinese state-owned enterprises in overseas investment offer a proposal.Apart from introduction and conclusion,this dissertation is divided into four parts:The first part summarizes managers’ loyalty duty of Chinese state-owned enterprises in overseas investment.Due to the " quasi-politician " status of state-owned enterprises and the national property of state-owned assets,in addition to the fact that the principal-agent chain of state-owned enterprises is further stretched,the external supervision is more weak,and the violation of loyalty obligations by managers is more likely to occur,so it is necessary to put forward high standards for the Loyalty Obligations of state-owned enterprises’ overseas investment managers.Through the case of Bo Qiliang and Chen Jiulin,we can find many problems in the process of state-owned enterprises’ overseas investment and operation due tomanagers’ violation of loyalty obligations.For example,the legal system of our country has not strict requirements and insufficient supervision on managers’ Loyalty Obligations,and the parent company of state-owned enterprises has weak binding force on subsidiaries.The second part is about the main reasons why the managers of state-owned enterprises violate the duty of loyalty.From the perspective of law,there are three main reasons: First,there are inadequate provisions in Chinese law on the duties of loyalty of state-owned enterprises’ overseas investment and operation managers,which are specifically: the scope of the subject of the loyalty obligations is too narrow,the lack of regulations on the duties of loyalty of operating managers after leaving office,Insufficient protection of company opportunities,inadequate approval and review mechanisms for conflict of interest transactions,inadequate relief mechanisms,etc.;Second,inadequate supervision of state-owned enterprises’ overseas investment and operation managers,chaotic regulatory structure,parent company’s weak supervision and extremely limited information disclosure have made management managers dare to "willfully behave".Thirdly,there are deficiencies in the accountability mechanism.The existing laws have imposed lesser penalties on operating managers who violated their fidelity obligations and limited accountability.The measures also focused on administrative and criminal responsibilities,ignoring the civil liability of those responsible.The third part is the general situation and enlightenment of the United States Foreign Corrupt Practices Act.Commercial bribery crimes by enterprises and their managers are often closely related to illegal conflicts of interest transactions.Therefore,cracking down on commercial bribery can also limit illegal conflict of interest transactions and prevent the loss of state-owned assets.The law enforcement agencies and law enforcement methods of FCPA will help strengthen the supervision of state-owned enterprises’ overseas investment and operation managers and strengthen the crackdown on violations of fidelity obligations.FCPA’s accounting provisions reflect its emphasis on internal control mechanisms and prevention of illegal acts,which is also critical to improving the internal governance structure of state-owned enterprises and improving their own management.FCPA can not only provide a mirror for China to combat transnational commercial bribery crimes,but also provide new ideas for strengthening the supervision of state-owned enterprises ’overseas investment management managers’ loyal obligations.The fourth part is the suggestions of improving the legal system of managers’ loyaltyduty of Chinese state-owned enterprises in overseas investment.There are mainly four aspects:First,from the perspective of legislation,we should improve the legal system related to the obligation of loyalty,expand the scope of the subject of the obligation of loyalty,strengthen the protection of company opportunities,and improve the review and approval mechanism of conflict of interest transactions.Secondly,we should improve the management level and governance ability of the state-owned enterprises,strengthen the supervision of the subsidiary companies,choose the investment mode carefully and reasonably,improve the transparency of the enterprises,and pay attention to the prevention and control of the acts violating the loyalty obligation.Thirdly,we should coordinate the distribution of functions among many government departments,set up special supervision institutions and strengthen audit responsibility.Finally,we should establish a perfect liability system,so that the rights of attribution and claim for damages can be effectively exercised,and strengthen the responsibility of illegal intermediary agencies.