China – Overview Of The Pilot And Actual Operation Of The Criminal Compliance Non-prosecution System.

Since the "first year of compliance" in 2018, "compliance" has been a topic of heated discussion in the legal practice community. In 2020, in order to better promote the operation of private enterprises in accordance with laws and regulations, under the guidance of the criminal incentive system as the core, my country's procuratorial organs initiated the reform of the compliance non-prosecution system.
 

In January 2020, Zhang Jun, the chief procurator of the Supreme People’s Procuratorate, stated at the National Procurator General’s Meeting: “On the one hand, we will use greater efforts to protect the legitimate rights and interests of private enterprises and entrepreneurs, and ensure that those If the lawsuit is not prosecuted and the actual sentence can not be sentenced, a probation proposal should beput forward. On the other hand, it is necessary to vigorously promote private enterprises to build a bottom line of law-abiding and compliance." This statement reflects the promotion of China’s incentive mechanism for corporate criminal compliance The determination to develop.
 

In March 2020, the Supreme People’s Procuratorate launched a pilot program of corporate criminal compliance non-prosecution reforms in six primary-level prosecutors. The pilot units were Shanghai Pudong New District People’s Procuratorate, Shanghai Jinshan District People’s Procuratorate, Jiangsu Zhangjiagang People’s Procuratorate, and Shenzhen Bao’an District People’s Procuratorate, Shenzhen Nanshan District People’s Procuratorate, Shandong Province Linyi Tancheng County People’s Procuratorate.
 

In October 2020, the People’s Procuratorate of Zhejiang Province actively carried out a pilot project for legal supervision of corporate economic crime criminal compliance in five procuratorates. The pilot units were Ningbo Municipal People’s Procuratorate, Wenzhou People’s Procuratorate, Cixi People’s Procuratorate, and Wenzhou Lucheng District People’s Procuratorate. The People's Procuratorate of Yongkang City.
 

Of course, in addition to the pilot units, many provincial, municipal, and district/county-level procuratorates are also actively exploring and experimenting with corporate criminal compliance non-prosecution systems, such as Liaoning Province, Zhejiang Daishan, Jiangsu Wuxi, Shenzhen Longhua District, etc. Wait.
 

In the process of the reform of criminal compliance non-prosecution, some procuratorates have formulated relevant opinions to guide them. For example, the People’s Procuratorate of Daishan County has issued the "Criminal Compliance Process for Enterprises Involved in the Case (Trial)". Another example is the People’s Procuratorate of Liaoning Province and other ten agencies. Together with the formulation and distribution of the "Opinions on Establishing a Compliance Inspection System for Criminal Enterprises". Some procuratorates have carried out practical operations in the handling of cases involving criminal enterprises.
 

According to the summary in the work "The Compliance Incentive Model of Criminal Litigation" by Professor Chen Ruihua of Peking University Law School, in the current practice of China's compliance non-prosecution reform, there are mainly two modes: "procuratorial recommendations" and "conditional non-prosecution" [1] :
 

First, the procuratorial suggestion model. In the process of review and prosecution, the procuratorate, after making a relatively non-prosecution decision, for companies involved in the case that had a minor crime and pleaded guilty and pleaded guilty, they were ordered to establish a compliance management system by proposing procuratorial recommendations.
 

Second, the "conditional" non-prosecution model. During the process of review and prosecution, the procuratorate set up a certain test period, temporarily not prosecuting enterprises suspected of crimes, and supervised and inspected the establishment of criminal compliance by the enterprises, and after the expiration of the period, the progress of the establishment of the compliance management system , The system for making a decision to prosecute or not to prosecute.
 

The criminal compliance non-prosecution reform will continue to be tried and tempered in 2020. In this article, the author will not comment too much on the theory and system of non-prosecution for compliance. Instead, I will try to use public channels (including official portals, newspapers and magazines, news reports, WeChat public accounts, etc.) All regions searched and inquired about the relevant data, materials and cases of the criminal compliance non-prosecution system, and summarized the actual operation of each pilot unit and prosecutors that actively explored, aiming to sort out the criminal compliance non-prosecution system in China The preliminary staged practical results are for reference by the academic, business and legal practice circles.
 

• Pilot situation

   

In 2020, the 6 pilot units of the Supreme People’s Procuratorate and 5 pilot units in Zhejiang Province took the lead in exploring the reform and exploration of the criminal compliance non-prosecution system, gradually launching the relative non-prosecution of corporate crimes, and conducting criminal compliance supervision inspections on suspected criminal enterprises , Incentives and promotes compliance operations of enterprises by proposing procuratorial suggestions or conditional compliance non-prosecution.
 

• The highest inspection pilot (a total of 6 pilot units)
   

In March 2020, the Supreme People’s Procuratorate launched a pilot program for corporate compliance supervision of non-arrest, no prosecution, and no actual sentence imposed on illegal crimes involved in the case, and the pilot program of criminal compliance non-prosecution reform was carried out in six basic-level prosecutors across the country. The pilot units have Shanghai Pudong New District People’s Procuratorate, Shanghai Jinshan District People’s Procuratorate, Jiangsu Province Zhangjiagang People’s Procuratorate, Shenzhen Bao’an District People’s Procuratorate, Shenzhen Nanshan District People’s Procuratorate, Shandong Province Linyi Tancheng County People’s Procuratorate.
 

On September 10, 2020, sponsored by the Institute of Prosecutorial Theory of the Supreme People’s Procuratorate, co-organized by the Criminal Law Research Center of Renmin University of China, the Research Center of Judicial Reform and Litigation System Reform of Renmin University of China, and the Entrepreneur Crime Prevention Research Center of Beijing Normal University, Shenzhen The "Seminar on Corporate Criminal Compliance and Judicial Environment Optimization" organized by the Baoan District Party Committee and the People's Procuratorate of Shenzhen Baoan District was held in Shenzhen. [2]
 

1. Shanghai Pudong New Area People's Procuratorate
    

In 2018, in the process of exploring and implementing the leniency system for pleading guilty and punishing, the People's Procuratorate of Pudong New Area issued the "12 Opinions on Service Guarantee for the Construction of Business Environment in Pudong New Area." According to this opinion, for corporate crime cases, in practice, the procuratorate will hire a team of experts to conduct comprehensive assessments in terms of economic security, public interest, and market order. On the one hand, it puts forward feasibility inspection recommendations and stipulates that the enterprises involved in the case should conduct rectification within a certain period of time; on the other hand, it assesses whether it is necessary to initiate relevant procedures for the enterprises involved in the case. For companies that have completed rectification and pleaded guilty and punished, non-prosecution shall be applied in accordance with the law [3] .
 

Although the leniency system is slightly different from the criminal compliance non-prosecution system, the People’s Procuratorate of Pudong New Area proposed for the first time to evaluate the economic safety, public interest, and market order of enterprises, and put forward procuratorial recommendations for enterprises to request rectification and reform. The situation is one of the conditions for non-prosecution, and the prototype of the "procuratorial suggestion model" in the practice of criminal compliance non-prosecution can be seen.
 

The People's Procuratorate of Pudong New Area has also carried out a wealth of practice accordingly. For example, in 2018, a Shanghai electric company, Wang Mouqing, and Wang Mouzhi were suspected of issuing false value-added tax invoices. In this case, the Pudong Procuratorate issued procuratorial recommendations, and after a public hearing, the electrical company, Wang Mouqing, and Wang A rule made a decision not to prosecute. In September 2020, for a technology company suspected of falsely issuing value-added tax invoices, in view of the voluntary plea of ​​guilt and punishment, all the taxes involved were paid, and the establishment of the corporate compliance system was initiated. The subjective malignancy and social harm are small. Pudong prosecution Decide not to prosecute according to law [4] .
 

• Shanghai Jinshan District People's Procuratorate
   

In 2020, the People's Procuratorate of Jinshan District carried out practical operations against criminal compliance non-prosecution through tax-related crimes. For example, in December 2020, a public hearing hosted by Pan Chunwei, deputy procurator of the Jinshan District People’s Procuratorate, listened to the opinions of investigative agencies, suspected enterprises, criminal suspects and defenders, and people’s supervisors on whether a company in Shanghai was criminal The conditions for supervision and inspection and the criminal compliance supervision and inspection conducted by procuratorial organs were discussed [5] .
 

The prosecutors of the People's Procuratorate of Jinshan District published and discussed their views and suggestions on the criminal compliance system in the WeChat public account "Shanghai Procuratorate". In addition, the People’s Procuratorate of Jinshan District has also held several symposiums in 2020. For example, in its "Tax-related Case Handling Symposium", the procuratorate, together with the district court, the district tax bureau, and the district federation of industry and commerce, carried out criminal investigations on the enterprises involved. Consensus on compliance, etc. At the same time, the procuratorate also actively handled the procuratorial open day, and jointly discussed new policies such as criminal compliance with the district tax bureau, the court, the Federation of Industry and Commerce and other departments.
 

• People's Procuratorate of Zhangjiagang City, Jiangsu Province
   

At present, the institute has promoted the implementation of the "Inspection of Enterprise Benefits" project in the form of joint construction of party building projects by cooperating with relevant functional departments. The project's mechanisms related to corporate criminal compliance non-prosecution mainly include:
 

• Sign a cooperative opinion letter, and work with the municipal industry and commerce to promote the establishment of a corporate criminal compliance system.
   

• Formulate the "Applicable Measures for Relative Non-Prosecution of Corporate Crimes" and actively explore the relative non-prosecution of corporate crimes.
   

• Compiled the "Manual for Prevention and Control of Corporate Criminal Risks" and compiled six types of typical cases involving enterprises. [6]
   

The People's Procuratorate of Zhangjiagang City actually visited relevant companies to promote criminal compliance construction and play a role in social governance. For example, on October 15, 2020, the prosecutor of the People's Procuratorate of Zhangjiagang City went to Changyinsha Modern Agricultural Demonstration Park Zhangjiagang City Unicom Chemical Machinery Co., Ltd. to conduct a criminal compliance visit and inspection, and served the "Corporate Criminal Compliance Notice" [7 ] . 
 

Since 2019, the Zhangjiagang City Procuratorate has actively explored services for corporate criminal compliance inspection and supervision, conducted compliance risk reviews on all corporate-related cases, studied and judged the lack of corporate compliance construction, and took strengthening the construction of the compliance system as a necessary content for procuratorial recommendations and guidance Enterprises learn from the case and draw inferences [8] .
 

Since 2020, the Zhangjiagang Procuratorate has handled a number of cases involving companies suspected of falsely issuing special value-added tax invoices. In these cases, the procuratorate conducted public hearings on the cases, conducted compliance risk reviews, and urged companies to strengthen the establishment of a compliance system, and Consider whether to make a decision not to prosecute in light of the circumstances of the company's crime, the subsequent payment of taxes, and the restoration of legal interests. For example, on November 18, 2020, the Jiangsu Provincial Procuratorate notified 8 typical cases at the press conference of "Optimizing Service Measures · Escorting Private Enterprise Development". Among them, the company Y handled by the People’s Procuratorate of Zhangjiagang and Mr. The invoice case was selected.
 

In this case, the Zhangjiagang People's Procuratorate conducted a compliance risk review on the company's financial management, internal management, and hazardous waste disposal. At the same time, after the procuratorial agency recommended that the company strengthen compliance building, the company also invited professional lawyers to serve as the company's independent compliance review commissioner to conduct compliance evaluations on the company. Subsequently, the procuratorial organ held a hearing to consider the circumstances of the company's minor circumstances and timely payment of taxes, and made a relative decision not to prosecute. From this case, we can see that the Zhangjiagang Procuratorate actively played the role of social governance in the handling of corporate-related crime cases, and took corporate taxation, finance, and internal control management as an important consideration in handling cases. In this case, we can also see that the company involved in the case introduced an "independent compliance reviewer" to help the company in compliance building, which echoes the requirement of an independent third-party supervision role in the compliance non-prosecution system.
 

• Shenzhen Nanshan District People's Procuratorate
   

In 2020, the Nanshan District People’s Procuratorate formulated the “Working Plan for the Pilot Application of Conditional Non-Prosecution in Criminal Cases Involved in Enterprises (for Trial Implementation)” to intensify the exploration of applying the non-prosecution system to enterprises involved in the case, assist enterprises in establishing and improving various systems, and promote enterprises Operate in compliance with laws and regulations [9] . The plan sets a compliance supervision and inspection period of 6 to 12 months [10] . During this test period, prosecutors regularly (usually every 2 months) conduct supervision and inspections on the company’s implementation of the compliance plan, guide them to further improve the compliance plan, and submit corresponding supervision and inspection reports to the prosecution agency .
 

The People's Procuratorate of Nanshan District has also practiced the criminal compliance non-prosecution system in many cases. For example, the People’s Procuratorate of Nanshan District, Shenzhen City made a decision not to prosecute the person in charge of a company, Mr. Wang, who was suspected of bribing non-state employees. The Nanshan District People’s Procuratorate stated that it will give full play to its procuratorial function, relying on its identity as a legal supervisor, to help companies in criminal compliance construction, assist companies in improving various management systems, strengthen employee legal awareness training, and regularly build criminal compliance for the company Supervise the implementation and promote corporate compliance operations [11] .
 

• People's Procuratorate of Baoan District, Shenzhen
   

On August 21, 2020, the People's Procuratorate of Bao'an District , Shenzhen, Guangdong Province and the Bureau of Justice of Bao'an District jointly signed the Interim Measures for Corporate Criminal Compliance Cooperation . At the meeting, the two units fully discussed the "Interim Measures for Corporate Criminal Compliance Cooperation" and the regulations on the selection and appointment of independent monitors [12] . The People’s Procuratorate of Bao’an District, Shenzhen has set a conditional non-prosecution test period of 1 to 6 months. During this test period, the procuratorial organ, with the assistance of an independent monitor, will supervise and inspect the company's implementation of the compliance plan. The procuratorial organ can also assign prosecutors stationed in the enterprise to conduct supervision and inspection work [13] .
 

On August 28, 2020, the Bureau of Justice of Bao'an District, Shenzhen issued the "Regulations on the Selection and Management of Individuals for Independent Monitoring of Corporate Criminal Compliance", which provides supporting measures for the implementation of the "criminal compliance non-prosecution" mechanism. According to the regulations, independent monitors conduct investigations on corporate criminal compliance, assist suspected companies in formulating compliance plans, and assist the district People’s Procuratorate in supervising the implementation of compliance plans, and issue phases for their performance and the establishment of corporate criminal compliance. The written monitoring report will serve as a reference for the district People’s Procuratorate to make corresponding handling decisions. At present, the Shenzhen Baoan District Justice Bureau has announced the first batch of law firms selected as independent monitors, a total of 11 law firms.
 

• People's Procuratorate of Tancheng County, Linyi City, Shandong Province
   

In 2020, the People’s Procuratorate of Tancheng County mainly promulgated the “Measures for the Implementation of Relative Non-Prosecution of Corporate Crimes”, which clarified the scope of application of the case (applicable main crimes and circumstances) and applicable subjects, and also considered corporate compliance and public interest performance. , Strengthen the mechanism of economic impact assessment, criminal compliance supervision and inspection, and relative non-prosecution necessity review, and establish a "non-prosecution + compliance inspection recommendations" work model. At present, the court has handled 22 corporate crime cases with 44 persons, conducted 5 non-prosecution necessity reviews, 4 criminal compliance inspections, and did not arrest 5 people or prosecute 7 people [14] . The court has designed "one picture and three books" for prosecutors in handling cases, namely the "Corporate Crime Relative Non-Prosecution Case Handling Flow Chart" and the "Corporate Crime Relative Non-Prosecution System Notification", "Corporate Social Responsibility Investigation Form", Three types of legal documents [15] .
 

Recently, the court is also dealing with two companies suspected of falsely issuing special value-added tax invoices. Based on the preliminary criminal compliance investigation, the court has signed criminal compliance agreements with the two companies and urged the companies to recommend a criminal compliance system. , And hired relevant personnel from the county Federation of Industry and Commerce and the private enterprise inspection service team of the hospital as compliance supervisors.
 

From the above content and data, we can see that the six pilot units have their own advantages. At present, according to the policy orientation, relevant regulations and case practices of the above pilot units:
 

• The People’s Procuratorate of Pudong New Area, the People’s Procuratorate of Zhangjiagang City, and the People’s Procuratorate of Tancheng County prefer to adopt a compliance procuratorial suggestion model. Based on consideration of the criminal charges and circumstances of the company involved in the crime, they decide whether to not prosecute, and issue procuratorial recommendations to request The enterprise repairs its legal interests, conducts compliance construction and rectification.
   

• Zhangjiagang City People’s Procuratorate, Nanshan District People’s Procuratorate, Bao’an District People’s Procuratorate, and Tancheng County People’s Procuratorate have all tried to introduce the role of compliance supervisor or independent monitor to help companies in compliance construction and supervise the construction of corporate compliance systems.
   

• The Baoan District People’s Procuratorate and the Nanshan District People’s Procuratorate clarified the compliance supervision and inspection period. 
   

• The People’s Procuratorate of Jinshan District, the People’s Procuratorate of Zhangjiagang City, the People’s Procuratorate of Bao’an District, and the People’s Procuratorate of Tancheng County have all tried to promote the establishment of corporate criminal compliance systems through the joint assessment of corporate compliance with other departments or institutions.
   

• Zhejiang Province Pilot Project ( 5 pilot units in total )
   

In mid-October 2020, the People’s Procuratorate of Zhejiang Province launched a pilot project of legal supervision of criminal compliance for corporate economic crimes, and has been transferred to market entities for review and prosecution of eight types of economic crimes suspected of smuggling crimes, crimes of disrupting the management order of companies and enterprises, such as If they meet the conditions for prosecution, and voluntarily plead guilty and punished, and promise to carry out construction and accept inspections, they can be dealt with as relative non-prosecution depending on the circumstances. Among them, Ningbo Municipal People's Procuratorate, Wenzhou People's Procuratorate, Cixi City People's Procuratorate, Wenzhou Lucheng District People's Procuratorate, Yongkang City People's Procuratorate are the pilot units, and the pilot period is one year [16] .
 

In addition, according to the introduction by Zhejiang Provincial Prosecutor Jia Yu, the core of the Zhejiang pilot is to deal with specific types of economic crimes and statutory penalties. The criminal suspects and criminal suspects have clear facts about their crimes and meet the conditions for prosecution. In the case of repairing the damaged legal benefits and committing and actively establishing an effective criminal compliance plan, the prosecutors suspend the prosecution of the company first, and conduct legal supervision of the company’s compliance construction within the prescribed time limit. If the criminal compliance construction has reached It is expected that the procuratorial organ will impose relatively non-prosecution actions on the enterprises or persons in charge involved in the case. It can be seen that the Zhejiang pilot reform will mainly adopt the mode of conditional non-prosecution [17] .
 

1. Ningbo Municipal People's Procuratorate

2.  

The People’s Procuratorate of Ningbo City issued the "Opinions on Establishing a Compliance Inspection System for Criminal Enterprises (Trial)", which mainly includes the concept of the compliance inspection system for criminal enterprises and the scope of application of cases, review procedures, specific implementation procedures, and types of inspection agencies , The duration of the inspection, the obligations of the company being inspected, the responsibilities of the procuratorial organ, and the processing procedures after the inspection. As introduced by the Procurator of Ningbo Municipal People’s Procuratorate, Ye Weizhong, the court tried to explore the establishment of a compliance inspection system for companies involved in crimes. For companies suspected of crimes, a certain inspection period was set up during the review and prosecution process, and the companies involved in the Accept the inspection commitment, and during the inspection period, according to the compliance plan, improve the corporate governance structure, improve the management rules and regulations, and standardize the production and operation methods, and then determine whether to prosecute after the end of the inspection period based on its compliance construction and criminal circumstances [ 18] .
 

At present, Ningbo Municipal People's Procuratorate has already started many practices. For example, a bid collusion case between an engineering company in Ningbo, Yao Mou, etc. (one of the typical cases of “Six Stability” and “Six Guarantees” in Ningbo City (the sixth batch)). A transportation investment company in Ningbo conducted a public tender for a provincial road reconstruction project. In order to ensure that a Ningbo Engineering Construction Group Co., Ltd. (hereinafter referred to as Ningbo Engineering Company) won the bid for the above-mentioned projects, its relevant staff contacted relevant units to participate in the bidding by means of giving benefits.
 

In February 2020, the case was reviewed and prosecuted by the People's Procuratorate of Yinzhou District, Ningbo City. The People's Procuratorate of Yinzhou District collected key information on the operation, taxation, and employment of the units involved in the case, carried out follow-up observations for 6 months, and dynamically grasped their operating conditions and compliance performance. In view of the low social harm and the fact that some of the involved persons surrendered themselves, the court made a relative decision not to prosecute the unit that constituted the crime of bid rigging and one part of the involved persons [19] .
 

• Wenzhou People’s Procuratorate and Wenzhou Lucheng District People’s Procuratorate (two pilot projects)
   

In September 2019, the Wenzhou City Procuratorate issued the "Measures for Social Evaluation and Assessment of Criminal Cases Involving Enterprises", introducing social evaluation and assessment methods to deal with enterprises involved in the four aspects of the necessity of protection, the possibility of salvation, the restoration of social relations, and the fulfillment of social responsibilities. , Entrepreneurs or employees carry out social evaluation and assessment, and implement the policy of fewer arrests and caution. Since 2019, Wenzhou procuratorial organs have conducted investigations on their own or commissioned the Federation of Industry and Commerce and industry associations to conduct social evaluations on 209 cases, involving 156 companies and 214 corporate personnel. According to the evaluation by the society, 167 cases involving enterprises were relatively non-prosecuted [20] .
 

In addition, in response to the increase in tax-related crimes involving private enterprises in recent years, the Wenzhou People’s Procuratorate promptly studied and formulated guidelines for relative non-prosecution in cases of falsely issuing special value-added tax invoices, and at the same time targeted private entrepreneurs suspected of fraudulent loan, bill acceptance, and financial ticket crimes. As well as the issue of bank-enterprise disputes, research and formulate work opinions on handling corporate criminal cases prudently in accordance with the law [21] . It can be seen that the procuratorial organs of Wenzhou City have rich practical experience in the relative non-prosecution system and the introduction of social evaluation methods.
 

On October 22, 2020, the New Era "Two Health" Rule of Law Research Center was established in Wenzhou, and the center will implement criminal compliance pilot work.
 

• Cixi City People's Procuratorate
   

Cixi City People's Procuratorate has established the Fourth Procuratorial Department in 2019, which specializes in handling enterprise-related cases. In response to the frequent cases of false issuance of special value-added tax invoices in Cixi City, the court actively communicated with the Municipal Taxation Bureau and other departments, regarding false tax payments of less than 100,000 yuan, a first-time offender, a good attitude towards repentance, and ability to pay taxes in a timely manner The business operators who have paid the money can generally be considered for relative non-prosecution. In 2020, in order to further implement the requirement of "less arrests and cautious prosecution", the court has studied and formulated documents to decide not to prosecute nine minor criminal cases.
 

On October 22, 2020, the Cixi City People’s Procuratorate and the Federation of Industry and Commerce held a symposium on procuratorial enterprises. The next work arrangement of the court included the legal supervision of economic crimes of pilot enterprises. At the symposium, the court released a batch of typical cases, one of which was a sewage discharge case from a soybean product processing plant. In the process of handling the case, the court actively implemented its pre-litigation inspection and recommended supervision method, and cooperated with the Ecological Environment Bureau to supervise Enterprises clean up and restore the pollution that has been caused.
 

• Yongkang People's Procuratorate
   

On October 28, 2020, Yongkang City People's Procuratorate and Yongkang City Federation of Industry and Commerce jointly held an exchange symposium. Yongkang City People's Procuratorate introduced the legal supervision of corporate compliance review and its implementation methods. According to reports, the Yongkang People’s Procuratorate will strengthen cooperation with the Federation of Industry and Commerce. Internally, it is considering the trial of “suspended prosecution” for some enterprise-related cases, but requires enterprises to perform specific obligations within a certain period of time, and fully accept the supervision and supervision of the prosecutors. Survey. Externally, explore the establishment of a "compliance supervisor" and "inspection and assessment" mechanism, consider absorbing professional supervisory departments to join the compliance team, and extensively listen to the professional suggestions and opinions of relevant functional departments to form a "professional + society" dual-pronged effective supervision Mode [22] .
 

Based on the experience of the above five pilot units in Zhejiang Province:
 

• The Ningbo Municipal People’s Procuratorate mainly adopts a conditional non-prosecution model. It sets a 6- to 12-month inspection period for companies involved in the crime, and decides whether to prosecute the company based on the company’s operating status and compliance performance during the inspection period . In addition, the reform method that Yongkang People's Procuratorate intends to adopt is also a conditional non-prosecution model, and it is proposed to introduce professional compliance supervisors and regulatory agencies to build a compliance system.
   

• Wenzhou City People’s Procuratorate and Cixi City People’s Procuratorate have clarified the application scope of relative non-prosecution.
   

• Summary of the practice of active reform
   

In addition to the above-mentioned pilot units, the Supreme People’s Procuratorate issued the “Opinions on Fully Performing Procuratorial Functions and Strengthening the Judicial Protection of Property Rights”, “Opinions on Giving Full Play to the Procuratorial Function to Guarantee and Promote the Healthy Development of Non-Public Ownership Economy”, and “Fully Utilizing the Prosecution Function Provide judicial guarantee for the development of private enterprises-under the guidance of documents such as procuratorial organs handling legal and policy issues involving private enterprise cases, all provinces, cities, districts and county procuratorates across the country are exploring in practice the system of non-prosecution for corporate criminal compliance. The following is a summary of some typical system reforms or cases.
 

• Longhua District, Shenzhen City, Guangdong Province
   

In addition to the two pilot projects in Shenzhen, in April 2020, the People’s Procuratorate of Longhua District, Shenzhen, based on the actual situation of criminal cases accepted by the court, issued the "Opinions on the Implementation of Legal Interest Restoration and Investigation Period for Criminal Cases Involving Private Economy (Trial)" . The opinion stipulates that for private economic cases transferred for review and prosecution, if the criminal suspect has the willingness to repair the damaged legal interests, the criminal suspect shall propose a compliance rectification plan to repair the infringed legal interests, and the procuratorial organ shall conduct a legal review During the prosecution period, a legal interest restoration inspection period is set up, and after the expiration of the period, a relative non-prosecution or a lighter punishment recommendation (ie the conditional non-prosecution mode) is made as appropriate. Since the introduction of the system, the court has applied the system to a number of cases involving private economy.
 

• Zhejiang Province
   

In addition to the pilot units mentioned in 1 (2) above, according to the information currently available through public channels, many cities, counties and regions in Zhejiang Province have successively made explorations and breakthroughs in the handling of corporate criminal cases. At present, the People’s Procuratorate of Zhejiang Province has taken the lead in formulating the “Guiding Opinions on the Application of Laws and Policies in Criminal Cases Involving Private Enterprises” to further refine the judgment criteria of “if you can’t arrest, you can’t prosecute”, and clarify the mitigation of common crimes committed by private enterprises. The handling standards include specific provisions on the determination and policies of eight crimes suspected of illegal business operations, contract fraud, illegal absorbing of public deposits, and fund-raising fraud [23] .
 

On September 27, 2020, Daishan County People’s Procuratorate issued the "Criminal Compliance Handling Process for Enterprises Involved in the Case (Trial)" (Daijianfa Office [2020]) ("Handling Process"). The company involved in the case issued a notice of criminal compliance risk, and the company voluntarily decides whether to make a compliance commitment. After receiving the company’s compliance commitment, the procuratorate will select compliance supervisors to station in the company and establish a rectification period for the company. The rectification period expires In the future, a hearing will be held to evaluate the rectified enterprises and decide whether to proceed with relative non-prosecution.
 

There are also many practical cases in this county. For example, an enterprise in Daishan, Zhejiang Province fraudulently obtained bank loans by forging special value-added tax invoices and fictitious collateral. In the process of transfer for review, prosecutors carefully review the case and visit companies and banks, and require companies to submit compliance commitments to the prosecutors. After receiving the letter of commitment, the Daishan People’s Procuratorate held a public hearing on the proposed non-prosecution and invited the people’s supervisor to participate in the case review. In the end, the Daishan County People’s Procuratorate made a relative non-prosecution decision and publicly announced the company and the persons involved in the case . [24] According to Daishan County People’s Procuratorate’s handling procedures and case handling methods, the court also mainly adopted a conditional non-prosecution method for pilot reforms.
 

In addition to the above practices, there are many bright spots in Zhejiang's reforms. For example, on August 21, 2020, the Corporate Criminal Compliance Promotion Association jointly established by various departments in Binjiang District, Hangzhou City, serves as a corporate compliance service platform to provide services for corporate criminal compliance.
 

• Shanghai
   

In 2019, on the basis of the original criminal defense business research, the Shanghai Lawyers Association established a Criminal Compliance Business Research Committee, guided by the concept of criminal compliance prevention, and played the role of corporate criminal compliance and internal control risk management.
 

In April 2020, the Shanghai People's Procuratorate formulated the "Shanghai Procuratorate Service Guarantee Plan 2020 Action Plan for Comprehensively Deepening the Construction of the International First-class Business Environment" (hereinafter referred to as the "Version 3.0 Plan"). The plan clearly mentions that a criminal compliance evaluation system should be introduced in the procuratorial link to reflect the policy evaluation of corporate compliance [25] .
 

In October 2020, the Shanghai Municipal Procuratorate issued the "Implementation Opinions on Shanghai's Procuratorate Services Guaranteeing the Reform and Opening up of the Pudong New Area to Realize High-quality Development in the New Era". The opinion also proposes to explore the introduction of corporate criminal compliance incentive mechanisms in the procuratorial process, and to make the performance of criminal compliance obligations of criminal enterprises an important condition for non-prosecution [26] .
 

In practice, the People's Procuratorate of Changning District adheres to the concept of "criminal strikes" and "compliance rescue" in practice. Through the procuratorial suggestion model, the People's Procuratorate of Changning District conducts a comprehensive evaluation of companies involved in the crime and makes a decision not to prosecute.
 

The Putuo District People's Procuratorate also mainly adopts the procuratorial suggestion model in practice. For example, at the beginning of 2020, the People's Procuratorate of Putuo District, Shanghai accepted a case of fraudulent invoicing by an online education platform company. After research and judgment, the court concluded that the Internet company involved in the case had a relatively minor crime and a better attitude toward pleading guilty, which made up for the loss of national taxes. The prosecutors issued a criminal compliance inspection proposal to the enterprises involved in the case of strengthening the awareness of corporate compliance operations, strengthening the financial internal control mechanism, and focusing on operational risk management, and instructed the companies to implement rectification. The Putuo District People’s Procuratorate decided not to prosecute the company in a public announcement [27] .
 

• Jiangsu Province
   

In October 2020, the People’s Procuratorate of Jiangsu Province issued the "Several Opinions on Services and Guarantees for the Healthy Development of Private Enterprises". Article 9 clearly stipulates that private enterprises that have lesser, lesser circumstances or less harmful to the society and plead guilty and punished For crime-related and light sentence cases, the decision to prosecute can be postponed, and enterprises can be urged to establish a sound compliance system. After a certain period of time, if the criminal compliance standard is assessed, it may make a decision not to prosecute or propose a sentence of lenient punishment, and withdraw the case information that the procuratorial organ has made public. It can be seen that the reform trend in Jiangsu Province is mainly carried out through the conditional non-prosecution model.
 

The Suzhou City Procuratorate also formulated the "Detailed Rules for the Implementation of the Leniency System for Criminal Compliance within a Time Limit for Enterprises Involved in the Case." For enterprises that meet the criminal compliance standards, they can make a decision not to prosecute or propose a leniency penalty. For example, in the case of Smuggling General Goods by the C Group Company and Xiao Mou handled by the Suzhou Procuratorate, the court made a relative non-prosecution decision against the three units in accordance with the law, and required the company to issue a "Corporate Criminal Compliance Commitment" to complete corporate compliance within a time limit System construction to ensure the normal operation of enterprises [28] .
 

It is noteworthy that the case of Wuxi F Police Equipment Company's false VAT invoice issued by the People's Procuratorate of Xinwu District, Wuxi City was selected as the 22nd batch of guiding cases of the Supreme Law. After the procuratorate assessed the situation of the case, it put forward specific procuratorial recommendations on how to promote the legal and standardized operation of the enterprise, and urged the enterprise involved in the crime to improve the company's management system. Based on the recommendations of the procuratorial organs, the company formulates a compliance business plan, revises the company's rules and regulations, and conducts legal compliance management training for employees. In light of the improvement of the company, on March 6, 2020, the court made a decision not to prosecute the company and Wu XX and other four people, confiscate the illegal income of the non-prosecuted persons and impose administrative penalties on the non-prosecuted units to the public security organs And the tax authorities separately put forward procuratorial opinions. From this case, it can be seen that the People's Procuratorate of Xinwu District mainly adopted the procuratorial suggestion model, and it also united with other administrative agencies to impose administrative penalties on criminal enterprises.
 

Except that Wuxi City passed the procuratorial suggestion model and decided not to prosecute the company, the People’s Procuratorate of Pukou District of Nanjing City and the Yancheng Economic Development Zone both adopted the procuratorial suggestion model to compare a suspected false VAT invoice case and a collusive bidding case. Decision not to prosecute. In addition, the Jiangyin City People's Procuratorate adopted a deferred prosecution agreement to examine the compliance plan and the method of checking and accepting compliance results (that is, the conditional non-prosecution model) to make a non-prosecution decision.
 

• Liaoning Province
   

On December 16, 2020, ten agencies including the People's Procuratorate of Liaoning Province issued the "Opinions on Establishing a Compliance Inspection System for Criminal Enterprises." This opinion is currently the only document signed and formulated by the provincial multi-departmental federation, which clarifies the main conditions, applicable conditions, inspection agency, compliance plan and handling after the compliance inspection (with no conditions attached). Prosecution model). The opinion also clarified that after the procuratorial agency makes a decision not to prosecute the crime-related enterprise, if it considers that an administrative penalty is necessary, the decision of non-prosecution should be transferred to the administrative supervision agency, and the administrative supervision agency shall handle it in accordance with the law.
 

In addition to the above-mentioned more typical system reforms or cases, there are also practical cases in other regions of our country. For example, the People’s Procuratorate of Xisai Mountain, Huangshi, handled a bid collusion case through the procuratorial suggestion model; Qingdao City Procuratorate passed the prosecution of a smuggling case involving enterprises The proposed model requires the improvement of the internal control system of the enterprise, standardizes compliance with cross-border e-commerce business, and finally makes a decision not to prosecute; Chongqing Fengjie District People’s Procuratorate sets an observation period for a company suspected of falsely issuing value-added tax invoices , Made a decision not to prosecute.
 

Introducing criminal compliance into the consideration of procuratorial organs in deciding whether to not prosecute, and initiating the construction of a compliance incentive mechanism in the field of criminal law is undoubtedly a major benefit for private enterprises. This reform is not only conducive to promoting and encouraging enterprises to actively establish compliance plans in their daily production and operations, to prevent crimes, but also to prevent enterprises from being imprisoned for crimes and imprisonment, resulting in enterprises unable to operate normally, even bankruptcy, and affecting third parties (eg The legal rights of corporate employees, upstream and downstream parties). Under the criminal law framework, we urgently need to establish a more complete compliance incentive mechanism, deepen the theoretical research and practice of criminal compliance, and combine the experience of pilot reforms with the revision of upper-level laws and regulations to promote the establishment and non-prosecution reform of compliance. mature.
 

 

 

For further information, please contact:

 

Peng Qiao​, R&P China Lawyers

info@rplawyers.com
 

 

[1]  Chen Ruihua: "The Compliance Incentive Model of Criminal Litigation", published in "Chinese Law", Issue 6, 2020.

[2]  Yu Xiao: "Playing the role of procuratorial function to help enterprises strengthen criminal compliance construction", published in "Procuratorate Daily" No. 9327, September 23, 2020, 3rd edition.

[3]  "Pudong Prosecutors Issued "12 Opinions on Service Guarantee Pudong New Area Business Environment Construction"", published in Shanghai Pudong New Area People's Government Website, http://www.pudong.gov.cn/shpd/news/20180301/ 006001_cfa2c42f-100c-4c89-a9cf-9627dec2f4f1.htm , last access date: December 28, 2020.

[4]  "The lawyer's defense opinion was adopted, and the private enterprise falsely invoiced more than 2.26 million yuan and was not prosecuted by the procuratorial agency", published on WeChat public account "Shanghai Li Xiaohua Law Firm", December 9, 2020.

[5]  "Jinshan District Court invites people’s supervisors to participate in public hearings in a company-related case", published on the Shanghai Jinshan District People’s Procuratorate website, http://www.shjcy.gov.cn/jsjc/dwjd/rmjdy/69116. jhtml , last access date: December 28, 2020.

[6]  ""Inspection of Enterprise Benefits" Cohesion Party Building Leads and Promotes Development", published in Zhangjiagang People's Procuratorate Network, http://szzjg.jsjc.gov.cn/lianluo/202011/t20201117_1128972.shtml , last access date: 2020 December 28th.

[7]  "Our Court Visits Enterprises to Carry out Criminal Compliance Inspections", published in Zhangjiagang People's Procuratorate Network, http://szzjg.jsjc.gov.cn/yw/202010/t20201016_1110339.shtml , last visit date: December 2020 29th.

[8]  "A case handled by the Zhangjiagang City Procuratorate was selected as a typical case of the "Optimization of Service Measures · Escorting the Development of Private Enterprises" Press Conference of the Provincial Procuratorate", published on the WeChat public account "Zhangjiagang Procuratorate Release", November 19, 2020.

[9]  "Helping the construction of the business environment and seeing how Nanshan Procuratorate can solve problems for enterprises", published on WeChat public account "Shenzhen Nanshan District People's Procuratorate", June 17, 2020.

[10]  See "The People's Procuratorate of Nanshan District, Shenzhen Municipality Regarding the Application of Conditional Non-Prosecution Pilot Work Plan for Enterprise Crime Cases (Trial)", internal release draft.

[11]  "Applying in accordance with the law and not prosecuting to promote corporate compliance operations", published on WeChat public account "People's Procuratorate of Nanshan District, Shenzhen", April 16, 2020.

[12]  Liu Jian: "Our Court and the Baoan District Justice Bureau held the "Interim Measures for Corporate Criminal Compliance Cooperation" Signing Ceremony", published on WeChat public account "Shenzhen Baoan District People's Procuratorate", August 21, 2020.

[13]  Chen Ruihua: "The Compliance Incentive Model of Criminal Litigation", in "Chinese Law", Issue 6, 2020.

[14]  "Road Exhibition of the Results of "Nine Major Reform Actions": Tancheng Chapter", published on WeChat public account "Linyi Reform", December 23, 2020.

[15]  Tancheng County Party Committee Reform Office: "Tancheng County Explores the Pilot of Relative Non-Prosecution of Corporate Crimes to Serve the High-quality Development of Private Economy", published on the WeChat public account "Linyi Reform", November 28, 2020.

[16]  "The main body of the service guarantee market, what momentum will 1+1+1 release? ", published on WeChat public account "Zhejiang Procuratorate", October 23, 2020.

[17]  Fan Yuehong and others: "Let the construction of high-level rule of law in Zhejiang reflect more procuratorial elements", published in "Procuratorate Daily" Issue 9387, November 30, 2020, first edition.

[18]  Wang Chun: ""Compliance Inspection" Escorts the Healthy Development of Private Enterprises", published in No. 12549 of the Rule of Law Daily, September 23, 2020, fourth edition.

[19]  "Ningbo City Procuratorate Service "Six Stability" and "Six Guarantees" Typical Cases (Sixth Batch)", published on WeChat public account "Ningbo Procuratorate", September 24, 2020.

[20]  Fan Yuehong, et al.: "Wenzhou: Let Entrepreneurs Go to the Battlefield and Start a Business Calmly Deal with Risks", published in "Procuratorate Daily" No. 9407, December 20, 2020, 3rd edition.

[21]  Fan Yuehong, etc.: "Providing the Best Protection for Enterprise Operation", published in "Procuratorate Daily" No. 9354, October 28, 2020, first edition.

[22]  "Serve the "Six Stability" and "Six Guarantees", listen to the voices of enterprises, and discuss the construction of corporate compliance, published in WeChat public account "Yongkang Inspection", October 28, 2020.

[23]  Same as Note 22.

[24]  "This company has submitted a corporate compliance commitment letter to the prosecutor. What is going on? ", published on WeChat public account "Daishan County People's Procuratorate", August 14, 2020.

[25]  See "Shanghai Procuratorate Issues "Version 3.0 Program" to escort the construction of a world-class business environment", posted on Shanghai Procuratorate, http://www.shjcy.gov.cn/xwdt/jcxw/58724.jhtml , last interview Date: December 30, 2020. 

[26]  See Lin Zhongming and others: "Shanghai: 20 Measures to Serve Pudong's High-Quality Development", published in "Procuratorate Daily" No. 9349, October 13, 2020, first edition.

[27]  Yao Zhigang, etc.: "Creating a Pure Land to Ride the Wind and Waves | Brand Building of Grassroots Institutions·Putuo", published on WeChat public account "Shanghai Procuratorate", November 21, 2020.

[28]  See "Suzhou City Procuratorate's Legal Business Press Conference", on the Suzhou City People's Procuratorate website, http://sz.jsjc.gov.cn/xwfbsz/202008/t20200826_1082179.shtml , last access date: 2020 December 30.