Why corporate fraud prevention is important?

1. Development and Preservation of corporates’ internal system

The fraud and corruption activities will harm companies from the internal side like caner, and many companies are failed due to key staffs and senior management’s fraud and corruption.

2. The external corporate compliance requirement

There are explicit requirements for the compliance of corporate operation in accordance with the laws and regulations. The market supervisory authority (the Industry and Commerce Bureau) will punish corporate frauds pursuant to Anti-Unfair Competition Law. The public security organ also will be involved in the investigation for the criminal liabilities of the company and the relevant personnel if there are criminal activities detected. China Securities Regulatory Commission also has strict requirements for the compliance of the public listed companies. The public listed companies shall prohibit the corporate fraud activities, which would cause serious adverse effect on the listed companies. The Chinese companies or multinational corporations which are listed in overseas market shall be legally bound to the Foreign Corrupt Practices Act (“FCPA”) and other relevant anti-fraud and anti-corruption laws and regulations. There have been 25 multinational corporations were investigated because of conducting commercial bribery in China by FCPA since 2002. For example, the subsidiary of Siemens in China was fined 1.6 billion dollars for bribing the Chinese officers through a consulting company in exchange for the project contract.

Common positions involved in corporate fraud

Unreasonable management structure, unsound internal rules and systems, unrestricted rights allocation and uncontrolled corporate supervision are common factors cause corporate fraud to happen. The common positions involved in corporate fraud are those positions possess the rights to recommend, approve, decide or with the convenient access to corporate property such as the accountant, cashier, business personnel, department directors, the personnel responsible for risk control, purchase and storage.

Main forms of corporate fraud

The main forms of corporate fraud include but not limited to commercial bribery (bribery of non-official servant), duty encroachment, theft, embezzlement, infringement of commercial secrets, copyrights (or other intellectual properties), illegal dealings in the same business (limited to the directors, managers of state-owned enterprises), illegally making benefits for relatives and friends (the staff in the state-owned enterprises, corporations and public institutions), breach of trust to damage listed company’s benefits( limited to the directors, supervisors, senior managers of listed companies), insider trading. The aforesaid activities are illegal and shall be subject to criminal prosecution if the prosecution standard is meet.

Criminal investigation of anti-fraud by XING HAN lawyers

【Criminal Investigation】we can provide criminal investigation through comprehensive measures such as audit, electronic forensics (search and recover the documents, emails, chatting records of Wechat and QQ and analyze the computer system operating behaviors, external survey and talk with the involved personnel.

【Criminal report】We can help clients to prepare for the criminal prosecution report and related evidences and take criminal prosecution to the competent public security organ in accordance with the results of investigation, relevant evidences and the criminal case filling and we can also coordinate with the public security organ for investigation.

【Claim negotiation】We can help clients to claim criminal compensation and recover losses through negotiation, recovery by criminal law means, criminal reconciliation, criminal understanding and criminal execution.

【Design risk control of anti-fraud】We can customize the anti-fraud program to eliminate the internal fraud risks based on the special positions of the company after familiar with the key positions and business process. Furthermore, we can also help clients to design business process and provide systematic planning on the basis of positional identities, positional convenience, behaviors and labor relationships, which would be favorable to the subsequent criminal prosecution.

The Advantages of XING HAN

Professional criminal law team

We have a professional criminal law team, which has rich criminal experiences and is specialized in the economic crimes such as duty encroachment, commercial bribery, and infringement of business secrets and intellectual property.

Unique electronic forensics

We have professional electronic forensic expert, who can assist clients to find and obtain evidences from electronics of involved staff such as computes, storage medium, and telephones through data screening, data recovery and behavioral analysis.

Rigorous investigation thinking

The partner of the criminal law team previously worked as a police officer with over ten years’ experiences; he has the abilities of rigorous investigation thinking and analytical reasoning of suspicious clues.

Abundant survey methods

The criminal law team is specialized in all-round investigation through external background analysis, electronic forensics, audit and inquiry.

 Representative cases

• Three key business personnel of a Hong Kong enterprise embezzled corporate assets through false accounting method. We helped the enterprise to investigate and obtain evidences and filed criminal prosecution to the public security organ. Consequently the three personnel were investigation for criminal liability.
• A technical staff stole the original design paper from a subsidiary of a public listed company engaged in automobile industry. We helped the company to eliminate the risk of losing core technical secrets through comprehensive survey methods such as electronic forensics, design questions, inquiry, the second investigation and inquiry.
• A finance subsidiary of a well-known electronics companies failed to recover financing capital of 500 million due to fraud of a business team. Our criminal law team helped the company to investigate this issue when the staff involved the case refused to cooperate with the investigation. The staff involved the case finally was prosecuted under the crime of taking advantage of duty after the criminal team investigated his reimbursement and current account.
• A finance subsidiary of a famous electronics company failed to recover a 12 million RMB worth loan due to the fraud of a business staff. Our criminal law team recovered significant amount of evidences and clues of illegally collection of brokerage fees and kickback from the computer used by the business staff. Finally the staff admitted his guilty and compensated the losses and the broker involved also was compelled to remedy the losses.
• A senior manager of a well-known video network platform was reported to withhold corporate receivables. Our criminal law team helped client to summarize the evidences and obtain additional evidences, by submitting sufficient evidences and communicating with economic crime investigation department, the criminal law team successfully filed criminal prosecution application and the public security department starts investigation against the manager.