【Introduction to the Case】
In January 2017, in order to win a construction project in Kaifu District of Changsha, a construction company (hereinafter "Company") in Hunan organized several competing companies to perform bid-rigging by way of a unified arrangement of quotations. The project was completed and accepted, but no settlement was made.
In November 2020, the Municipal Public Security Bureau of Kaifu Branch of Changsha discovered this illegal bidding behaviors during the inspection and filed a case for investigation against the Company for the crime of collusion in bidding. In August 2021, the case was transferred to the People's Procuratorate of Kaifu District, Changsha for examination and prosecution.
【Case-handling Process】
In April 2021, the Supreme People's Procuratorate issued the Plan on Carrying out the Pilot Program of Corporate Compliance Reform, and Hunan Province has been officially involved in the second phase of the pilot program of the “corporate compliance non-prosecution system”. Changsha City is one of the pilot programs carried out in Hunan Province, and there is no precedent of compliance non-prosecution in Kaifu District before. In December 2021, after accepting the entrustment of the company involved, lawyers Zeng Yujie and Liu Juan from Tiandiren communicated for several rounds with the procuratorate and experts from third-party organizations, eventually obtained the procuratorate's consent of the Company to carry out criminal compliance rectification, and the procuratorate set the compliance inspection period for the Company at 3 months.
During the inspection period, Zeng Yujie and Liu Juan conducted a comprehensive review of the Company's situation and established an overall compliance plan. They assisted the Company to conduct compliance reconstruction in all aspects of compliance risk investigation, establishment of compliance agencies, and establishment and improvement of enterprise systems. In particular, with respect to the compliance risks that may arise in the bidding process, they carried out special system establishment, and conducted several rounds of training and communication with the employees of the Company to ensure that the compliance system was put in place.
On April 21, 2022, the Changsha Kaifu District Procuratorate held a hearing on the case. The deputies to the Kaifu District People's Congress and members of CPPCC participated in and listened to the speeches of the Company and the third-party organizations. The attendees of the hearing unanimously formed a non-prosecution decision. On May 5, 2022, the Changsha Kaifu District Procuratorate made a non-prosecution decision.
【What is "Non-Prosecution Compliance"】
The corporate compliance refers to that a crime-related enterprise carries out criminal compliance rectification when meeting the conditions of the compliance non-prosecution system and is supervised and inspected by third-party organizations. After the expiration of the compliance inspection period, the procuratorate will make a decision such as approval or disapproval of arrest, prosecution or non-prosecution in accordance with the law based on the result of compliance rectification of the enterprise involved. Suspected criminal enterprises will have the chance to obtain the non-prosecution decision made by the People's Procuratorate through compliance rectification, i.e. the so-called "non-prosecution compliance".
【Why "Non-Prosecution Compliance"】
In the past, according to the Criminal Law of PRC, there were only two outcomes for enterprises suspected of criminal offenses: non-prosecution or prosecution. And only in cases where a criminal suspect has no criminal facts, or the evidence is insufficient, or the circumstances of a crime are minor, the procuratorate can make a non-prosecution decision. Restricted by the market environment and historical causes, the majority of enterprises in our country do not have a high degree of legality and compliance in their business operations. Therefore, for many enterprises, once their illegal and criminal acts have been investigated and handled by the investigation organs, they will face criminal penalties. Criminal penalties will not only impose financial penalties on enterprises and personal punishments on management personnel, but also deprive enterprises of qualifications for subsequent business activities. Therefore, in the event of a criminal penalty, the enterprise is essentially sentenced to "death".
By conducting compliance rectification, the suspected criminal enterprises are given another opportunity for them to "turn over a new leaf", and to correct, mitigate, or eliminate the harmful consequences of their suspected violations, so that the enterprises can return to the market and conduct law-abiding operations after the rectification. For the suspected criminal enterprises, they can save themselves at minimal cost and continue to develop.
The non-prosecution compliance system will be fully rolled out in the whole nation after several rounds of pilot programs. For the enterprises involved in the case, it will be a very favorable to seek non-prosecution compliance when the relevant conditions are met. For all enterprises, it is the top priority of enterprise risk control to establish a sound criminal risk prevention system to stop the risk before the crime occurs.
