The so-called agency refers to the legal system that "the agent performs civil legal acts in the name of the principal within the agency authority, and the principal bears civil liability for the agent's agency acts" [1]. Under the agency system, the principal is also called "himself". The principal shall bear the consequences and responsibilities of the acts performed by the agent in the name of the principal within the authority granted by the principal. In international commercial transactions, the agent is generally paid, that is, the principal needs to pay a certain remuneration to the agent.

Hiring an agent and using the agent's public resources and / or experience to obtain or even execute projects has become an important way for Chinese "going global" enterprises to develop the international market and execute overseas projects. On the one hand, it provides important help for the operation of overseas projects of Chinese enterprises, on the other hand, it will also bring great risks to Chinese enterprises, especially compliance risks. Therefore, Chinese enterprises need to regulate the use of agents

1、 Value of using overseas project agents

When Chinese enterprises "go global", they will face unfamiliar and very different environments from China, including natural environment, political environment, economic environment, legal environment, social environment and cultural environment. Local public relations resources are lack, information asymmetry, business models and transaction habits are very different, and the employment of agents can help to solve the above difficulties. Specifically, the value of overseas project agency is mainly reflected in the following aspects:

(1) Use the public relations resources of the project host country to assist Chinese enterprises in obtaining overseas projects

The importance of public relations resources in project acquisition is self-evident. Different project owners and stakeholders are different. When Chinese enterprises go to the host country to obtain projects, they lack public relations resources and are likely to be unable to contact the main stakeholders of the target project; Even if you contact the industry backbone of a project, it does not mean that you can contact the industry backbone of other projects. By employing a project agent who has a close relationship with the industry's main stakeholders, you can contact the industry's main stakeholders of the target project through the agent, do the work of the industry's main stakeholders, and greatly improve the probability of obtaining the target project.

(2) Assist Chinese enterprises to solve the problems of strangeness and information asymmetry to the environment of the host country

When Chinese enterprises go abroad to obtain and implement projects, they may be unfamiliar with the laws, markets, customs, taxation, finance, insurance, foreign exchange, labor and employment, technical standards, environmental protection and trading habits of the host country. If these information is not investigated clearly, it may lead to the uncertainty of quotation boundary and the inaccuracy of construction period accounting, At the same time, the project risk cannot be effectively evaluated. If an agent familiar with the local environment is employed, the agent can provide this information to solve the problem of strangeness to the environment of the host country and information asymmetry in the process of negotiation with the owner.

(3) Use the professional experience of the agent to assist in negotiating and implementing the project

Some agents may have strong project operation ability and rich professional experience. Such agents are more valuable to Chinese enterprises. They can not only help Chinese enterprises obtain projects, but also put forward their own professional opinions when Chinese enterprises negotiate with overseas project partners, and can convince project partners to facilitate the closure and signing of contract negotiation. At the same time, for project implementation, such professional agents can also use their own professional experience to provide professional services for project implementation, which is helpful for Chinese enterprises to successfully implement projects. Of course, employing such professional agents may require Chinese enterprises to pay higher agency fees.

2、 Compliance risk of using overseas project agents

Using overseas project agents to acquire and execute projects has the above value for Chinese enterprises, but it also has high risks: once the agency capacity is insufficient or non-compliance behavior is made, it will bring great risks to Chinese enterprises, especially the highly sensitive compliance risk in recent years, because according to the above agency mechanism, The consequences and responsibilities of the agent's agency behavior are borne by the Chinese enterprises as the principal. According to the author's experience in serving overseas projects for many years, Chinese enterprises face at least the following compliance risks when using overseas project agents:

(1) Risk of bribery

Objectively speaking, when Chinese enterprises use overseas project agents to obtain and execute projects, they may involve the transfer of interests, especially the transfer of interests based on the project. This transfer of interests is easy to lead to serious non-compliance or illegal risk in law - bribery. If the project partner is a government or quasi government agency, it will constitute bribery to public officials of the host government; If the project partner is a commercial entity, it may constitute commercial bribery. This kind of interest transfer behavior may cause serious economic losses and reputation losses to Chinese enterprises as the principal, and even lead to criminal responsibility.

For example, in 2009, an enterprise in China was exposed to be suspected of offering bribes of US $1.76 million to the close relatives of the former Prime Minister of Bangladesh through project agents to obtain a port engineering project worth more than US $100 million in Bangladesh. At the same time, the transfer of benefits was carried out through US funded banks, so it was monitored by the US Department of justice and accused by the US Department of justice. The incident has had a great reputation impact on the enterprise and even its parent company, and it has also caused great difficulties for the enterprise to develop the Bangladesh market.

For another example, in 2017, he Zhiping, the former director of the Hong Kong Special Administrative Region, as the agent of an energy company in China, bribed the former Foreign Minister of Senegal to the president of Chad $2 million to obtain Chad's oil and gas exploration projects and the foreign minister of Uganda $500000 to obtain commercial interests on behalf of the energy company. He was intercepted and arrested by the U.S. Department of justice and accused of violating the United States The overseas anti corruption act was finally sentenced to three years' imprisonment by the U.S. court.

(2)Fraud risk

Fraud is also a typical risk that may be encountered when using overseas project agents. Chinese enterprises should also be vigilant. This risk is mainly reflected in the following two aspects:

(a) Agency fee fraud risk

Some agents with poor integrity use the urgent need of Chinese enterprises to obtain overseas projects, which may cover up the fact that they have no ability and resources to obtain projects for Chinese enterprises, exaggerate their relationship with industry stakeholders, so as to win the trust of Chinese enterprises, and then require Chinese enterprises to pay large agency fees prematurely. If the project fails to succeed in the end, the agent who pays prematurely will be punished There is a significant risk that the fee cannot be recovered.

For example, the author once assisted a subsidiary of a central enterprise to obtain a project in South Asia. The agent of the project claimed to have deep public relations in the host country, so it was certainly no problem to obtain the target project. Therefore, the author proposed to pay half of the agency fee (3 million euros) to the Chinese enterprise after the agency agreement was signed Later, the agent failed to help the Chinese enterprise successfully obtain the project, and the author also helped the Chinese enterprise successfully avoid the loss of agency fee of 3 million euros.

(b) Sanctions risk of international multilateral development banks

International multilateral development banks, such as the world bank, have high compliance requirements for the projects financed by them, one of which is anti bribery. Since many bribery acts are carried out through agents, the world bank focuses on monitoring the agency matters. In the projects financed by the world bank, the bidding documents of the owner usually require bidding The bidder shall fully disclose the agent used in the target project. If the bidder conceals the agent information, whether it has actually engaged in bribery through the agent or not, it will constitute fraud of Chengdu World Bank and may lead to sanctions against the bidder by the world bank.

For example, in March 2018, cnood Asia Limited ("schlude") concealed from the world bank that it "hired an intermediary to help win the bid" when bidding for a photovoltaic power plant project in Myanmar funded by the world bank In March 2021, the world bank issued a decision on compliance sanctions against schlude, which included schlude in the sanctions list for at least 16 months.

(3) Liability risk

As mentioned above, according to the legal logic of the agency system, the consequences and responsibilities of the agent's agency behavior are borne by the principal. Of course, the consequences and responsibilities of the agent's agency behavior within the agency authority and agency period are borne by the principal, but even if the agent's agency behavior exceeds the agency authority or agency period, if the other party has There are reasonable reasons to believe that the agent is still acting on behalf of the principal, and the consequences and responsibilities of the agency behavior are still borne by the principal, which is the legal mechanism of apparent agency. Therefore, in the process of agency behavior, the agent's ultra vires agency, overdue agency and agency failure will cause significant liability risks to the principal, and Chinese enterprises are hiring overseas projects Special attention should be paid when acting as an agent.

For example, in an overseas project that the author once served, the project agent asked the owner to reduce the quotation in the process of communication with the project owner. The project agent made an oral commitment to reduce the price to the owner without the prior consent of the Chinese enterprise as the principal, which caused great passivity to the Chinese enterprise. After trying to communicate and explain, it was understood by the owner , reversing the passive situation.

3、 Countermeasures and suggestions for agency compliance risk

For the above compliance risks used by overseas project agents, the author suggests that Chinese "going global" enterprises take the following measures to prevent and control, and strengthen and do a good job in compliance management:

(1)Investigate the credit standing of the project agent to be employed, and select qualified units or individuals (such as those required by local laws), good faith and rich public relations resources as the agent. On the one hand, it can prevent the risk of insufficient professional experience and ability of the project agent or public relations resources, On the other hand, it can also prevent the risk of lack of project agency qualification or violation of professional ethics.

(2) Try to avoid the exclusive agency mode; If the exclusive agency mode is adopted, the exclusive agency mode is limited to specific projects, rather than applying the exclusive agency to the whole target country or region. If the exclusive agency mode is adopted, in case of insufficient public relations resources, lack of professional ability and experience, or replacement of key stakeholders in the project industry, it may lead to the risk that it is difficult to obtain the project but unable to replace the agent.

(3) For the agency service of the agent, the reasonable agency fee shall be determined according to the service value. The payment of agency fee shall be subject to progress control, and the agency fee shall not be excessively paid in advance. For example, for overseas engineering contracting projects, before the advance payment paid by the owner arrives, China's contracting enterprises should not pay the agency fee to the agent, so as to prevent fraud of agency fee.

(4) The fundamental solution to the risk of agency bribery is to eliminate benefit transfer or bribery; If it is really unavoidable during the operation of the project (of course, the author does not advocate this practice), effective measures should be taken to reduce the compliance risk. For example, in the process of communication with the agent and agency fee payment, the communication system or payment system of the United States should be avoided to prevent falling into the jurisdiction of the long arm jurisdiction of the United States, Triggered anti bribery sanctions by the U.S. government.

For example, in the above he Zhiping sanctions case, the U.S. government has no basis for personal jurisdiction or territorial jurisdiction, but believes that the bribery involved in the case uses the U.S. communication system and payment system, so it has the minimum connection required for the jurisdiction of the U.S. government, Then it confirms the jurisdiction of the U.S. government - the risk of the long arm jurisdiction of the U.S. government should be highly valued by Chinese enterprises.

(5) Put forward clear requirements for the agent's agency behavior and standardize its agency behavior, such as:

 a、Require the agent to execute the agency matters in a legal way, and shall not violate the laws and regulations of the host country and even the third country in the process of agency behavior;

 b、Require the agent not to exceed the delegated authority or scope when engaging in agency acts;

 c、 Require the agent not to sign contracts, agreements and other documents binding on Chinese enterprises or make other binding commitments without the prior written permission of Chinese enterprises as the principal;

 d、After the expiration or termination of the agency term, if you do not want to extend the agency term, take back the power of attorney in time, and notify the important opposite party of the expiration or termination of the agency term, so as to prevent the formation of apparent agency and the risk of apparent agency;

 e、The agency is strictly required to keep confidential the facts and information of agency documents, agency acts and results, and shall not disclose the above agency information without the prior approval of Chinese enterprises.

(6) If the project to be acquired is a project financed by the world bank and other multilateral development banks, Chinese enterprises shall disclose the agency matters to the project owner and the multilateral development bank as the project financing party in strict accordance with the requirements of the multilateral development bank, so as to prevent the risk of compliance sanctions of the multilateral development bank.

4、 Conclusion

In recent years, the compliance incidents of Chinese enterprises have occurred frequently, and the compliance risk has become a high risk faced by Chinese enterprises "going out", and it is also a hot and difficult point in the risk control of overseas business of Chinese enterprises. Among them, the project agency risk is an important content of compliance risk. In order to guide Chinese enterprises to do a good job in compliance management, the SASAC of the State Council issued the guidelines for compliance management of central enterprises (for Trial Implementation) in 2018, and seven ministries and commissions such as the national development and Reform Commission also issued the guidelines for compliance management of overseas operations of enterprises in 2018 to guide Chinese enterprises, especially "going global" enterprises to do a good job in compliance management. Chinese "going global" enterprises should attach great importance to compliance management. Under the guidance of the above guidance documents, they should prevent compliance risks including agency risks, avoid compliance sanctions, and seek the support of external professional consultants when necessary, so as to achieve overseas healthy and sustainable development and achieve stability and long-term development.

《National Industry Forum》 - Song Yuxiang