Controversy Arises as Qian County Police Seek Tips on Internal Corruption in Small and Medium-sized Private Enterprises: How to Define the Boundary Between Criminal Intervention and Enterprise Self-Investigation

On November 14, Qian County Public Security Bureau in Shaanxi Province issued a “Notice on Collecting Leads on Corrupt Criminal Behaviors Within Small, Medium, and Micro Private Enterprises,” soliciting leads on corruption-related crimes such as duty-related crimes, embezzlement of funds, and bribery by non-state functionaries committed by internal personnel of small, medium, and micro private enterprises. However, this notice sparked some controversies, with some netizens believing it could negatively impact private enterprises and disrupt the business environment.
Staff from the Economic Investigation Team of Qian County Public Security Bureau, in an interview with the media, stated that the original intention of the “Notice” was to protect the business environment for small and micro private enterprises. There might have been some issues in the wording that led to misunderstandings. Currently, the Economic Investigation Team has not received any related leads. Qian County Public Security Bureau has withdrawn the notice and stopped using the reporting hotline.
In fact, prior to Qian County Police, several other local police departments have issued similar notices. Examples include the Friendly District Public Security Bureau in Heilongjiang, Jingzhou City Public Security Bureau in Hubei, Dandong City Public Security Bureau in Liaoning, Shangrao City Public Security Bureau in Jiangxi, and Gong’an County Public Security Bureau in Hubei.
From netizens’ comments, it can be seen that the discussion triggered by Qian County Police’s notice included voices expressing concerns that the notice specifically targeted the already vulnerable small, medium, and micro private enterprises. They worried about excessive police intervention in the internal governance of private enterprises, which might affect their operations.
In response to the prevalent issue of internal personnel of private enterprises infringing upon the legitimate rights and interests of private enterprises, on July 31, 2023, the Supreme People’s Procuratorate issued the “Opinions on Legally Punishing and Preventing Crimes Committed by Internal Personnel of Private Enterprises Against the Legitimate Rights and Interests of Private Enterprises, and Creating a Good Legal Environment for the Development of Private Economy.” The head of the Fourth Procuratorial Hall of the Supreme People’s Procuratorate stated that crimes committed by internal personnel of private enterprises cannot be simply regarded as the “family affairs” of private enterprises. Instead, they should be taken seriously in terms of concepts, systems, and measures. The boundary between criminal intervention and corporate self-regulation should be properly handled. While punishing crimes committed by internal personnel of private enterprises according to the law, normal production and business activities of enterprises should also be safeguarded in handling cases, helping private enterprises eliminate problems and improve internal governance.
Previously, several local police departments have collected leads on internal corruption crimes within enterprises.
On November 14, Qian County Public Security Bureau in Shaanxi Province issued a “Notice on Collecting Leads on Corrupt Criminal Behaviors Within Small, Medium, and Micro Private Enterprises,” soliciting leads on corruption-related crimes such as duty-related crimes, embezzlement of funds, and bribery by non-state functionaries committed by internal personnel of small, medium, and micro private enterprises. The notice stated that the purpose of this action was “to deeply carry out centralized governance of irregularities and corruption around the masses, effectively combat corruption crimes within small, medium, and micro private enterprises, and extend governance to address the chaos of infringing upon the legitimate rights and interests of private enterprises…”
However, the aforementioned notice sparked some controversies, with some netizens questioning whether it would cause negative impacts and disrupt the business environment.
Staff from the Economic Investigation Team of Qian County Public Security Bureau, in an interview with Qingdao Radio and Television Station’s “Ongoing News,” stated that the original intention of the “Notice” was to protect the business environment for small and micro private enterprises. There might have been some issues in the wording that led to misunderstandings. Currently, the Economic Investigation Team has not received any related leads. Qian County Public Security Bureau has withdrawn the notice and stopped using the reporting hotline.
Prior to Qian County Police, several other local police departments have issued similar notices.
The announcement issued by the Friendly Branch of Yichun City Public Security Bureau in Heilongjiang on September 28 showed that the leads on prominent corruption issues within private enterprises collected by the bureau included criminal behaviors such as duty-related embezzlement and embezzlement of funds committed by internal personnel of private enterprises; criminal behaviors such as illegally engaging in similar businesses, illegally seeking profits for relatives and friends, and favoring relatives by underpricing shares and selling enterprise assets, committed by internal personnel of private enterprises using their positions; criminal behaviors such as infringing upon trade secrets, trademark rights, and copyright, committed by key technical and management positions that affect enterprise innovation and development; criminal behaviors involving organized crime such as illegally lending at high interest rates, bullying in the industry, and forced buying and selling, which infringe upon the legitimate rights and interests of enterprises; and criminal behaviors such as financial fraud, contract fraud, and collusive bidding that disrupt market order.
On August 10, Jingzhou City Public Security Bureau in Hubei also issued a similar notice, which, apart from collecting leads on internal corruption crimes within private enterprises, also collected leads on criminal offenses of collusive bidding in the field of engineering construction. Specifically, it included: 1. Mutual collusion among bidders seriously damaging the interests of the tenderee or other bidders; mutual collusion between bidders and the tenderee seriously damaging the legitimate rights and interests of the state, collectives, and others; 2. Collusive bidding in key engineering projects such as municipal facilities, public services, transportation and water conservancy, farmland remediation, ecological restoration, environmental governance, and rural revitalization; 3. Collusive bidding after receiving more than two administrative penalties for collusive bidding within two years, or collusive bidding using illegal means such as threats, deception, or bribery; 4. “Bid-rigging” and collusive bidding by relying on or borrowing qualifications; bribery and acceptance of bribes in collusive bidding; 5. Using illegal means to coerce others to abandon bids, abandon winning bids, transfer winning projects, forge bidding qualifications, seals, documents, and other related criminal offenses; 6. Professional “bid hustlers,” “bid bullies,” and “bid kings” who specialize in planning, organizing, and implementing bid-rigging and collusive bidding, and disrupting the business environment; 7. Major commercial bribery crimes occurring during the bidding process for engineering construction projects.
Even earlier, on December 15, 2023, Shangrao Police in Jiangxi also issued a “Notice on Announcing the Reporting Methods for Leads in the Special Action to Combat and Rectify Corrupt Criminal Behaviors Within Private Enterprises.”
The notice stated that in response to the special action organized by the Municipal Political and Legal Commission to combat and rectify corrupt criminal behaviors within private enterprises, effectively govern the chaos of infringing upon the legitimate rights and interests of enterprises, actively promote the healthy development of private enterprises, and create a good legalized business environment for Shangrao’s economic development, Shangrao City Public Security Bureau now announces the scope and methods of reporting leads to the public and welcomes the masses to actively report relevant issues.
The leads collected by Shangrao Police included: 1. Corruption-related crimes such as duty-related embezzlement, embezzlement of funds, and bribery by non-state functionaries committed by internal personnel of private enterprises. 2. Criminal behaviors such as illegally engaging in similar businesses, illegally seeking profits for relatives and friends, and favoring relatives by underpricing shares and selling enterprise assets, committed by internal personnel of private enterprises using their positions. 3. Criminal behaviors such as infringing upon trade secrets, trademark rights, and copyright, committed by key technical and management positions that affect enterprise innovation and development. 4. Organized crime-related criminal behaviors such as illegally lending at high interest rates, bullying in the industry, and forced buying and selling, which infringe upon the legitimate rights and interests of enterprises, and legally punishing criminal behaviors such as financial fraud, contract fraud, and collusive bidding that disrupt market order.
How to Properly Handle the Boundary Between Criminal Intervention and Corporate Self-Regulation
In response to the prevalent issue of internal personnel of private enterprises infringing upon the legitimate rights and interests of private enterprises, the Supreme People’s Procuratorate issued the “Opinions on Legally Punishing and Preventing Crimes Committed by Internal Personnel of Private Enterprises Against the Legitimate Rights and Interests of Private Enterprises, and Creating a Good Legal Environment for the Development of Private Economy” on July 31, 2023.
The head of the Fourth Procuratorial Hall of the Supreme People’s Procuratorate introduced that, based on procuratorial case handling and research, one of the frequently reported issues is that crimes committed by internal personnel of private enterprises, especially key position personnel such as executives, finance, procurement, sales, and technology, against the legitimate rights and interests of private enterprises are not punished in a timely and effective manner. This not only severely affects the core competitiveness and innovation development of private enterprises but also disrupts the fair competition market order and undermines the development environment for private enterprises.
In recent years, China has introduced a series of procuratorial systems and measures to protect the legitimate rights and interests of private enterprises. “These systems and measures have not paid enough attention to the issue of crimes committed by internal personnel of private enterprises, and issues such as difficulty in filing cases, difficulty in investigation and handling, and difficulty in prevention have become the focus of many private enterprises,” said the aforementioned head. Procuratorial organs should implement the requirement of equal treatment and protection for state-owned and private enterprises. Crimes committed by internal personnel of private enterprises cannot be simply regarded as the “family affairs” of private enterprises. Instead