The two-way connection and improvement path for compliance and execution of enterprises involved in cases
Abstract: At present, there are problems such as the lack of smooth connection in the initiation stage, the unclear standards in the implementation stage, the obstacles to mutual recognition in the acceptance stage, and the insufficient incentives in the punishment stage. To explore the causes of the problem, it is necessary to conduct a comprehensive analysis from the three levels of law, implementation, and supervision, and then put forward a plan to improve the two-way connection between compliance and execution of enterprises involved in the case. It is necessary to build a coordinated and rectification model for the whole chain of enterprise compliance incentives before, during, and after the event, complete the construction of a standard system for the compliance of enterprises involved in cases, optimize the third-party oversight and assessment mechanism for the compliance of enterprises involved in cases, and integrate compliance supervision prior agreements to achieve cooperation and mutual recognition of punishments.
Keywords: Enterprises involved in the case, execution linkage, corporate compliance, full-chain compliance incentives
full text
In July 2023, the Opinions of the Central Committee of the Communist Party of China and the State Council on Promoting the Development and Growth of the Private Economy pointed out that "deepen the compliance reform of enterprises involved in cases and promote the compliance and law-abiding operation of private enterprises". Compliance management can not only effectively prevent illegal and criminal behaviors of enterprises, but also enhance the market competitiveness and social image of enterprises. However, there are still many problems in the compliance of the enterprises involved in the case in terms of the connection between administrative and criminal law, which not only affects the stable operation of the enterprises, but also poses challenges to the effectiveness of the legal enforcement system. Therefore, an in-depth study of the two-way connection mechanism for compliance and execution of enterprises involved in cases is of great theoretical and practical significance for promoting the compliance and law-abiding operation of enterprises, optimizing the legal environment, and promoting the healthy and sustainable development of enterprises.
I. The current situation and dilemmas of the implementation of the linkage between the compliance and execution of the enterprises involved in the case
(1) The compliance procedures in the initiation phase are not smoothly connected
How to procedurally integrate administrative organs into the work of initiating the compliance stage of enterprises involved in cases, clarify the boundaries of their responsibilities, and give play to the active role of administrative organs in substance, has become a major problem restricting the compliance of enterprises involved in cases. The mainland has adopted a dual-track law enforcement system, which deals with administrative violations and criminal offenses separately. Corporate crimes often violate administrative regulations at the same time, so it is usually the administrative authorities that investigate the relevant acts of the enterprise, and then transfer the case to the public security organs for investigation when the illegal acts are found to be suspected of crimes. Although the procuratorate hopes to effectively promote the compliance reform of the enterprises involved in the case by strengthening the connection between executions and executions, because the two belong to different systems, the administrative organs have no legal obligation to cooperate with the procuratorate in handling corporate crime cases. Although the Administrative Punishment Law has made it clear that administrative organs shall transfer cases suspected of criminal offenses to the public security organs for investigation, in practice, for local protectionist purposes such as local economic development and social stability, some regions still use administrative penalties instead of criminal penalties for local protectionist purposes. In addition, because some cases involve issues such as the disposal of property, the administrative organs are reluctant to involve other organs in the investigation of administrative violations that should be completely dominated by themselves, unless the cases are too complex and must be transferred with the help of the coercive power of the public security organs. If the administrative organs are simply placed in the position of auxiliary work, it will be difficult to mobilize their enthusiasm and the effect will be greatly reduced; On the contrary, if the administrative authorities are given certain powers at the stage of initiating corporate compliance, it may lead to abuse of power and shirk of responsibility.
(2) The standards for compliance in the implementation phase are unclear
There is a lack of effective basic standards for conducting a social investigation on the necessity and feasibility of corporate compliance for the enterprises involved in the case in the early stage, or conducting the necessary supervision of compliance rectification during the implementation period, and inspecting and evaluating the final implementation effect of the compliance plan of the enterprises involved in the case in the later stage. However, the compliance program requirements of different types of enterprises are also different, and they need to be flexibly adjusted according to the industry field, enterprise size and crime type within the framework of compliance standards, and effectively integrate the different compliance requirements of different departments. The design of the compliance system is a formal standard, while the effectiveness of compliance operation is a substantive standard, which requires the procuratorial and administrative organs to use a variety of review methods to evaluate the effectiveness of the compliance system. In this process, it is necessary for the procuratorial and administrative organs to coordinate with each other to avoid rectification and corruption falling into chaos and machinery, and to work together to improve professional compliance standards to achieve a long-term crime prevention effect.
(3) Mutual recognition of compliance results in the acceptance stage is hindered
In the compliance reform of the enterprises involved in the case, the third-party organization is mainly responsible for the review and assessment of the compliance plan. The Guiding Opinions on the Establishment of a Third-Party Supervision and Assessment Mechanism for the Compliance of Enterprises Involved in Cases (for Trial Implementation) issued by the Supreme People's Procuratorate and nine departments in 2021 strengthened the supervision and management responsibilities of the commission for the management of the third-party mechanism from the perspective of specific system design, and local judicial organs have gradually formed a variety of third-party supervision methods such as the "supervision model of procuratorial organs and administrative organs", "independent monitor model" and "third-party supervisor + enterprise compliance supervision and management committee model" through exploration. Among them, the supervision model of joint action between administrative organs and procuratorial organs helps to promote the connection between criminal justice and administrative law enforcement, and urges enterprises to improve their governance structure by jointly studying and judging the compliance acceptance standards of enterprises. However, in practice there are still some problems. In the course of the pilot reform, the procuratorate transferred the case to the administrative organ after making a decision not to prosecute on the basis of the compliance rectification situation. However, the administrative authorities may still impose severe administrative penalties such as revocation of franchise qualifications, orders for closure, and revocation of business licenses because they do not recognize the previous compliance results.
(4) Insufficient incentives for the outcome of the punishment phase
Under the "dual-track law enforcement system", it is difficult to ensure the effectiveness of compliance incentives due to the lack of a punishment mechanism between administrative and judicial authorities and the cooperation of mutual recognition of compliance results. Law enforcement, judicial, administrative supervision and third-party supervision play a key role in corporate compliance, which can not only effectively punish corporate crimes, but also fully protect the development rights and interests of enterprises and maintain the healthy order of the market. Although this design consideration is actively oriented to practical needs, it ignores the appropriate theoretical basis, which leads to obstacles at the application level, which in turn affects the effectiveness of compliance incentives. Under the current system of dual liability for violations, a crime means a violation of the law, but the violation of the law is not necessarily the same as a crime, and the main difference between the two is the degree of violation rather than the degree of infringement of legal interests by the illegal act. At the same time, the separation of the ownership of administrative organs and procuratorial organs makes the procedures for handling the competing liabilities of enterprises an inherent problem, and the law enforcement of administrative organs is more concerned with the occurrence of violations and the identification of illegal facts, and has limited understanding of whether enterprises have established a compliance management system and the rectification situation, and even does not care about whether administrative penalties will affect the "decriminalization" efforts that enterprises have already carried out.
II. Review of the causes of the dilemma of connecting the compliance and execution of enterprises involved in the case
(1) Legal level
In recent years, the mainland has carried out a lot of exploration and practice in promoting corporate compliance, but the relevant laws and regulations are still scattered and fragmented, and the lack of legal texts has also caused difficulties in practical operation. For example, in areas such as food safety and environmental protection, attempts have been made to initially establish a two-way linkage mechanism for the execution of enterprises involved in the case's compliance, and corresponding linkage measures have been introduced. However, the level of effectiveness of these laws and regulations is low, and the provisions on the connection between executions in various fields are different, so they cannot provide a unified normative basis for administrative organs and procuratorial organs, and their authority and universal applicability need to be strengthened. In response to the above shortcomings, the newly revised Administrative Punishment Law in 2021 has responded accordingly, providing a higher-level legal compliance for the system of connecting executions. With the deepening of the compliance reform of the enterprises involved in the case, the scope of departments involved has been expanding, and new problems and challenges have arisen in the process of transferring cases, such as poor procedural cohesion, unclear compliance application standards, and hindrance to mutual recognition of compliance results during acceptance, and the current Administrative Punishment Law still seems to be unable to effectively deal with these new problems.
(2) Implementation level
The current criminal liability and administrative liability systems in mainland China do not take the construction of corporate compliance as a factor in reducing or reducing liability, and there is also a lack of principled provisions at the legal level on the mutual recognition of punishment methods and punishment results. Mutual recognition and exemption between administrative and procuratorial organs may be more due to policy calls and tacit understanding between departments. This lack of normative supply further increases the probability of conflicting enforcement effects, which is not conducive to the real implementation of the compliance and execution of enterprises involved in the case. Not only is there a lack of smooth connection between the administrative organs and the procuratorial organs, but there are also obstacles to the connection between the same department in different regions. On the one hand, this exploration has achieved adaptation to local conditions and can effectively improve the efficiency of case handling, but on the other hand, such adaptation to local conditions may also evolve into "separate policies", which is not conducive to the subsequent construction of unified national norms and increases the compliance costs of cross-regional enterprises.
(3) Regulatory level
How to implement long-term supervision of enterprise compliance achievements and do a good job in the "second half" of the compliance of enterprises involved in cases is the focus and difficulty of the reform. At present, there are no special regulations for ex-post supervision and long-term supervision in the field of corporate compliance in mainland China, and there is no clear provision on whether the procuratorate will lead or the administrative organ at this stage, and the relevant regulatory practices are presented in the form of individual cases, lacking authoritative and typical demonstration cases. The discussion on this issue in the academic circles is still in the theoretical stage. Some scholars advocate extending the compliance inspection period to achieve the long-term effectiveness of corporate compliance supervision. Some scholars also advocate that a new model of joint supervision by the procuratorate and the administrative organ should be explored, and the two sides should establish a coordinated supervision mechanism to conduct long-term supervision of the effectiveness of corporate compliance construction.
III. Improve the path for the two-way linkage mechanism for compliance and execution of enterprises involved in cases
(1) Establish a coordinated rectification model for compliance incentives for enterprises involved in cases before, during, and after the event
The traditional regulatory model relies too much on ex post supervision, which has long been unable to meet the practical needs of mainland market regulation, and it is difficult to rely only on simple deterrence and ex post facto legal remedies in exchange for sufficient corporate compliance commitments, and it is difficult to establish a free and fair competition environment. Therefore, it is particularly important to build a full-chain enterprise compliance before, during, and after the event to improve the efficiency of government supervision. This should include ex-ante institutional norms, ex-ante dynamic supervision, and ex-post supervision and accountability, emphasizing the connection and coordination between all links and departments before, during, and after the ex-ante, so as to grasp the flexibility and principle of supervision, and further ensure that the compliance system plays its due role. In practice, procuratorial organs in some places have explored extending compliance reform to both ends, forming a whole-process mechanism, including pre-event prevention and publicity, in-process compliance incentives, and post-event follow-up services. The compliance preparation work was moved forward, and the procuratorial organs began to carry out compliance preparations in the intervening investigation process, and through in-depth and detailed special investigations, they closely communicated with the administrative organs and reached a consensus; After the fact, explore the establishment of cooperation mechanisms such as joint popularization of the law and the transfer of leads with the administrative organs, and try to advance the governance of the source of litigation from point to point. The realization of the compliance of enterprises involved in cases cannot be limited to one organ at a time, but needs to focus on key points and connecting links, deeply explore the causes of crimes, adhere to the whole process and systematically promote the pilot work of compliance reform, and avoid the compliance reform of enterprises involved in cases "treating headaches and feet". The two-way connection between the execution and execution of the compliance of enterprises involved in the case needs to be carried out from the perspective of the whole chain before, during, and after the event, firmly establish the concept of compliance of the whole chain, promote the integration process of enterprise compliance incentives, realize the connection between the four links of initiation, implementation, acceptance, and punishment, as well as the dual departments of administration and criminal law, and promote the organic integration of the "punishment" of end-of-line treatment and the "prevention" of front-end governance, and ultimately promote the effective realization of compliance incentives.
(2) Complete the establishment of a standard system for the compliance of enterprises involved in cases
At present, most of the theoretical logic and practical directions of the construction of compliance management systems in mainland China are directly borrowed from the existing achievements of the West, and the terminology used and the expression of compliance plans are mainly imported from Western laws and compliance documents of international organizations. In some respects, the competent administrative authorities of the mainland have a certain "late-mover advantage" in building a compliance system, which has avoided the detours made by many countries in the process. The reality faced by enterprise compliance itself is flexible and changeable, the key difficulties of different enterprises in carrying out compliance have their own merits, and the effectiveness requirements of compliance of different types and sizes of enterprises are also different, so scientific and complete standard guidance is needed to avoid confusion and mechanization in the application of compliance standards. On the one hand, it is necessary to take typology as the starting point to achieve the formulation of scientific compliance standards, and on the other hand, it is necessary to build effective compliance standards with the integration of execution and execution as the core, so as to eradicate the hidden dangers of violations and crimes. The core of corporate compliance is not a large and comprehensive compliance management system, but the identification and establishment of a special compliance plan for the enterprise to deal with "compliance risk points". Compliance standards are not only management measures for enterprises involved in cases to carry out compliance rectification, but also the basis for law enforcement agencies and third-party organizations to assess the effectiveness of enterprise compliance rectification.
(3) Optimize mechanisms for third-party oversight and assessment of the compliance of enterprises involved in cases
In addition to studying the specific path of the procuratorial organs in exercising their power in the compliance process of the enterprises involved in the case, it is also necessary to pay special attention to the procedural design and effectiveness evaluation and implementation of the third-party supervision and evaluation mechanism for the compliance of the enterprises involved in the case, the former is the external guarantee for the compliance of the enterprises involved in the case, and the latter is an important internal driving factor. The effective assessment carried out by the third-party organization and issued an authoritative assessment opinion is one of the core issues in the compliance investigation of the enterprises involved in the case. In order to prevent individual enterprises involved in the case from failing to implement their compliance commitments, or from taking advantage of compliance to obtain lenient treatment, it is necessary to resolutely put an end to "paper compliance", which requires the establishment and use of a third-party supervision mechanism. From the perspective of the existing regulations, the third-party supervision and evaluation mechanism mainly plays two roles, one is to provide consultation and review of the compliance program, and the other is to supervise the implementation and enforcement of the corporate compliance program. If the supervision of the administrative department is insufficient, especially during the compliance inspection period, it may lead to uncoordinated penalties, and it will be difficult to achieve the due governance effect. At this time, it is more necessary to give full play to the supervisory role of the third-party supervision and evaluation mechanism, so as to achieve effective incentives for the compliance of enterprises involved in the case. After the third-party organization intervenes in the relevant oversight and assessment, the coordination and cooperation between the procuratorate and the administrative organ should not interfere with or replace the role of the third-party organization, and these three types of entities should cooperate and supervise each other.
(4) Integrate compliance supervision into prior agreements to achieve cooperation and mutual recognition of penalties
In order to solve the problem of cooperation of punishment means and mutual recognition of results, it is a long-term solution to promote compliance incentives by promoting the revision of relevant administrative regulations and taking compliance as the statutory reason for exemption from fines and penalties and lessening penalties. Therefore, the search for a feasible bridging scheme has become a new direction for current practice exploration, in which it is flexible and feasible to promote the articulation of executions by way of prior agreement. The early integration of administrative organs into the compliance process of the enterprises involved in the case can effectively alleviate the disconnection between the administrative organs and the procuratorial organs in the subsequent implementation, acceptance, and punishment links. Specifically, there are a number of initiatives that can be taken during the compliance initiation phase. One way is to set up a joint administrative law enforcement team led by the procuratorate, giving the procuratorate a certain amount of leadership to coordinate the resources of various law enforcement and judicial agencies to ensure the coordination and consistency of compliance actions. Another way is to establish a joint hearing and joint meeting mechanism for compliance access, where all departments can jointly participate in and decide on the compliance review of the case.
*This article was published in the June 2024 issue of China Prosecutor magazine (Judicial Practice Edition)
Editor-in-Charge | Song Husha
Art Editor | Yu Yingying
Audit | Zheng Hong, Wu Ping
Source丨Chinese prosecutor's WeChat public account