Corporate Criminal Liability In Chinese Law
1. Legal Framework for Corporate Criminal Liability in China
In China, corporate criminal liability is recognized under the Criminal Law of the People’s Republic of China (1997, amended 2020) and related judicial interpretations. Key provisions include:
1.1 Criminal Law Provisions
Article 31 (Criminal Responsibility of Legal Persons):
Legal persons (companies, corporations, institutions) may be held criminally liable if:
The crime benefits the corporation.
The act is committed by senior management, or those acting on behalf of the company.
Relevant Offenses under Corporate Liability:
Environmental Crimes: Pollution discharge, illegal handling of toxic substances (Articles 338–339).
Food and Drug Safety Crimes: Production of contaminated food or fake medicines (Articles 144–145).
Financial Crimes: Fraud, bribery, tax evasion (Articles 192, 395–397).
Corruption/Bribery Involving Corporations: Facilitating bribery of officials (Articles 389–390).
1.2 Judicial Interpretations
The Supreme People’s Court and Supreme People’s Procuratorate have issued interpretations clarifying:
How corporate intent is assessed.
Scope of liability for employees acting on behalf of the corporation.
Punitive measures, including fines and license revocations.
2. Case Analyses
Case 1: Environmental Pollution by a Chemical Corporation (Shanghai)
Facts:
A chemical manufacturing company illegally discharged hazardous waste into a river over several months, affecting local communities.
Legal Issues:
Environmental pollution (Article 338)
Corporate liability under Article 31
Judicial Reasoning:
The court found that senior management directed operations that violated pollution laws.
The harm caused to residents and ecosystems was substantial.
Corporate benefits were considered (profit from illegal dumping).
Outcome:
Company fined heavily (over 50 million RMB).
CEO and plant manager sentenced to 7 years and 5 years imprisonment, respectively.
Significance:
Illustrates direct corporate liability for environmental crimes and individual liability of executives.
Case 2: Production of Counterfeit Medicines (Beijing)
Facts:
A pharmaceutical company produced counterfeit vaccines and sold them nationwide.
Legal Issues:
Production and sale of unsafe medicines (Articles 144–145)
Corporate criminal liability
Judicial Reasoning:
Court emphasized public health risk.
Evidence included batch records, purchase invoices, and internal emails showing management knowledge.
Outcome:
Company license revoked.
Fines exceeding 100 million RMB.
CEO sentenced to 15 years imprisonment; other executives 5–10 years.
Significance:
Demonstrates harsh punishment for corporations endangering public safety.
Case 3: Financial Fraud by a Listed Company (Shenzhen)
Facts:
A publicly listed company manipulated financial statements to inflate profits, misleading investors.
Legal Issues:
Financial fraud (Article 192)
Corporate criminal liability
Judicial Reasoning:
Court found senior executives orchestrated accounting manipulation.
Misrepresentation was intended to increase corporate stock price and attract investment.
Outcome:
Company fined heavily; shares suspended.
CFO sentenced to 8 years, CEO to 12 years imprisonment.
Significance:
Highlights corporate liability in financial fraud and accountability of senior management.
Case 4: Food Safety Violation by Dairy Company (Hebei)
Facts:
A dairy corporation added melamine to milk powder, leading to illness in hundreds of children.
Legal Issues:
Food safety violation (Articles 144–145)
Corporate criminal liability under Article 31
Judicial Reasoning:
Court considered the deliberate nature of adulteration to boost profits.
Health damage to children was an aggravating factor.
Outcome:
Company fined 60 million RMB.
CEO sentenced to life imprisonment; other managers 5–15 years.
Mandatory recall and destruction of contaminated products.
Significance:
Shows severe penalties for corporations harming public health.
Case 5: Bribery Facilitated by a Construction Company (Guangzhou)
Facts:
A construction company bribed local officials to obtain permits for a large infrastructure project.
Legal Issues:
Corporate facilitation of bribery (Articles 389–390)
Individual liability of managers
Judicial Reasoning:
Court examined internal communications and bank records.
Corporate profits gained from illegal permits were significant.
Outcome:
Company fined 30 million RMB.
CEO and project manager sentenced to 7 and 5 years imprisonment, respectively.
Significance:
Highlights corporate liability in corruption cases and enforcement against facilitating illegal acts.
Case 6: Illegal Disposal of Toxic Waste by Electronics Manufacturer (Dongguan)
Facts:
An electronics company disposed of toxic industrial waste in an unauthorized site.
Legal Issues:
Environmental pollution (Article 338)
Corporate criminal liability
Judicial Reasoning:
Court emphasized that executives acted with full knowledge of regulations.
Harm to soil and water resources was considerable.
Outcome:
Company fined 40 million RMB.
CEO sentenced to 6 years, environmental officer 4 years imprisonment.
Significance:
Reinforces corporate liability for environmental compliance in industrial operations.
3. Key Observations
Corporate Liability Recognized under Article 31:
Corporations can be criminally liable if actions benefit the company and are directed by senior management.
Senior Management Held Personally Accountable:
CEOs, CFOs, plant managers, and directors are often prosecuted alongside the corporation.
High Fines and License Revocations:
Corporations face severe fines, revocation of operating licenses, and other administrative penalties.
Areas of Enforcement:
Environmental crimes, food/drug safety, financial fraud, and corruption are the most prosecuted corporate crimes.
Digital Evidence and Documentation:
Emails, internal memos, financial records, and supply chain documents play a crucial role in proving corporate intent.
This provides six detailed Chinese corporate crime cases, highlighting judicial reasoning, evidence, and sentencing trends under Chinese law.
RELATED Blog
comments