The Chinese Ministry of Public Security issued a statement yesterday (14th) under the banner of “promoting the development of private economy,” unveiling five cases of internal corruption and crime within private enterprises. Informed lawyers suggest that such cases are often triggered by conflicts of interest within the company, leading to the freezing of assets of many enterprises, seen as a means for the public security to crack down on private companies and seize their assets. Overseas experts believe that the public security is merely putting on a show under the guise of assisting private enterprises in anti-corruption efforts.
The five cases of internal corruption and crime within private enterprises announced by the Chinese Ministry of Public Security include instances of suspected embezzlement and bribery of non-state employees, with some already facing prosecution or receiving guilty judgments.
The first case involves a customer manager named Yang from a technology company in Beijing, accused of using a fictitious account to illegally appropriate over 13 million yuan worth of company assets through purchases on an online platform.
The second case features individuals from Shanghai, Wu and Liu, suspected of accepting bribes as non-state employees. According to the case, Wu and Liu, while holding positions as procurement director and senior procurement engineer in a technology enterprise, collectively received over 9 million yuan in bribes from suppliers. They also allowed substandard products to enter the company’s procurement scope, resulting in losses for the company.
The third case involves individuals from Jiangsu, suspected of duty embezzlement. It is alleged that these individuals conspired to introduce substandard coal and coke into the production process, causing a loss of 35 million yuan to the company.
The fourth case revolves around Jin from Anhui, accused of duty embezzlement. Jin, during his tenure as a general manager in a certain company, exploited his position to embezzle over 8.7 million yuan of company funds.
The fifth case centers on Chen from Shandong, charged with duty embezzlement. Chen, while serving as the general manager of a construction investment company in Shandong, allegedly claimed 20 million yuan from the total project investment for personal gain.
The Chinese Ministry of Public Security claims that the governance of internal corruption within private enterprises necessitates efforts by public security agencies, as well as the establishment of a “clean and compliant system” by the companies.
Chinese lawyer Yang Yi revealed to the media that he recently dealt with a similar case involving three shareholders in a company, including a married couple and another minority shareholder. Initially having good relations, the minority shareholder eventually lost his rights in the company and received limited compensation after being sidelined. In many Chinese enterprises, majority shareholders regard the company as their own, leading to illegal activities. The minority shareholders then begin reporting on the majority shareholders, who in turn engage in illegal embezzlement by using company funds for bribery.
According to Yang, many company owners or major shareholders do not distinguish between company and personal assets clearly, leaving loopholes for public security to exploit. Once public security intervenes, the assets of many companies are seized, including personal funds of shareholders under the pretext of alleged crimes. This phenomenon is escalating due to the poor economic situation in China, leading to public security resorting to such tactics to crackdown on private enterprises and collect assets.
China’s problem expert Wang He highlighted that because private entrepreneurs own their businesses, they generally have better control measures against corruption compared to state-owned enterprises, not requiring the intervention of public security. However, public security often takes advantage when handling financial cases within private enterprises, exploiting opportunities while leaving these businesses voiceless. Consequently, private enterprises tend to resolve internal corruption internally and only resort to public security involvement as a last resort.
The Ministry of Public Security claims that special operations targeting internal corruption in private enterprises aim to recover significant economic losses for victimized companies, ensuring the legitimate rights and normal business order of enterprises.
Yang pointed out that behind the publicized facade, there are underlying interests at play. Various local governments in China are under financial strain, prompting public security to exploit internal disputes in companies or even create conflicts to justify filing cases. Once company principals or shareholders are implicated in cases, the company is essentially doomed, leading to its demise.
Wang argued that although the Ministry of Public Security professes to help private enterprises combat corruption, the main challenge faced by private enterprises in China is an unjust environment. Private enterprises are frequently pressured by organized crime, often with government backing, while public security refrains from intervening in their extortion attempts. Presently, the Ministry of Public Security’s involvement in claiming to assist private enterprise development and combat internal corruption is merely a façade.