Articles 103 and 108 of the "Regulations on Disciplinary Sanctions of the Communist Party of China" set out a negative list and made provisions on punishment for engaging in profit-making activities in violation of regulations.
1. Illegal business operation and establishment of enterprises
The "Regulations" stipulate that those who run businesses in violation of relevant regulations, own shares or securities of non-listed companies (enterprises), register companies or invest in shares outside the country (territory), shall be punished accordingly.
The subjective purpose of doing business is to obtain economic benefits or profits, and it does not matter whether it is actually profitable or not. As early as February 1986, the CPC Central Committee and the State Council issued the "Regulations on Further Prohibiting Party and Government Organs and Party and Government Cadres from Doing Business and Running Enterprises," which explicitly prohibited party and government cadres from doing business and running enterprises. Leaders of state-owned enterprises must not violate the "Several Provisions on the Honest Practice of Leaders of State-owned Enterprises" issued by the General Office of the CPC Central Committee and the General Office of the State Council in July 2009; Employees of public institutions must not violate the "Provisions on the Punishment of Staff of Public Institutions" and other provisions issued by the Organization Department of the CPC Central Committee and the Ministry of Human Resources and Social Security in November 2023.
Owning shares or securities of a non-listed company (enterprise), registering a company or investing in shares outside the country (territory) is essentially a business enterprise. In order to circumvent the party and state's regulations prohibiting party-member leading cadres from doing business and running enterprises, party-member leading cadres who hold certain functions and powers go abroad to register companies or invest in shares in order to obtain personal interests, they must be investigated for party discipline and responsibility.
You can't have both fish and bear's paws, there are two ways to get rich as an official, don't get rich if you become an official, and don't be an official if you get rich. In order to circumvent the relevant regulations, some party members and cadres have set up "shadow companies" behind the scenes, and have owned shares of non-listed enterprises through the means of holding shares on behalf of others.
2. Illegal trading of stocks or other securities investment
The "Regulations" stipulate that anyone who buys or sells stocks or makes other securities investments in violation of relevant regulations, uses the information obtained in the work of participating in enterprise restructuring and restructuring, private placement, merger investment, land use right transfer, etc., buys and sells stocks, and takes advantage of his authority or influence to make abnormal profits through the purchase of trust products and funds, etc., shall be given corresponding sanctions.
It is normal for Party members and cadres to invest in securities, but they must not engage in related activities in violation of regulations. In April 2001, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council promulgated the Several Provisions on the Personal Securities Investment Behavior of Party and Government Functionaries. The provisions make it clear that individual functionaries of party and government organs are strictly prohibited from engaging in the following acts: taking advantage of their powers, the influence of their positions, or taking other improper means to solicit or forcibly buy or sell stocks, or solicit or resell warrants; Using inside information to directly or indirectly buy and sell stocks and securities investment funds, or make recommendations to others to buy or sell stocks and securities investment funds; buying, selling, or holding or trading shares of listed companies within the direct business jurisdiction of others; borrowing the public funds of the unit, or borrowing the funds of the management and service objects, or borrowing the funds of subordinate units and individuals within the scope of their authority, or borrowing the funds of other units and individuals related to the exercise of their functions and powers, to purchase stocks and securities investment funds; raising funds to buy and sell stocks and securities investment funds in the name of units; Use working hours and office facilities to buy and sell stocks and securities investment funds.
At the same time, specific persons are prohibited from buying and selling stocks: the competent departments of listed companies and the competent departments of state-owned holding units of listed companies are not allowed to buy or sell the shares of listed companies managed by the above-mentioned competent authorities; The staff of the securities regulatory authority of the State Council and its dispatched agencies, stock exchanges and futures exchanges, as well as their parents, spouses, children and their spouses, are not allowed to buy or sell stocks; Where one's parents, spouse, children and their spouses work in a securities company or fund management company, or in an accounting (auditing) firm, law firm, investment consulting agency, asset appraisal agency, or credit rating agency granted securities and futures practice qualifications by the securities regulatory authority under the State Council, the staff members of the party and government organs shall not buy or sell the shares of listed companies with which they have business relations with the above-mentioned institutions.
Party members and cadres must strictly abide by the above regulations. If insider trading or the use of non-public information is used for trading, and a crime is suspected, it shall be transferred to the judicial organs for handling in accordance with law.
3. Engaging in paid intermediary activities in violation of regulations
The "Regulations" stipulate that those who engage in paid intermediary activities in violation of relevant regulations shall be given corresponding sanctions.
Paid intermediary activities refer to the activities of collecting property for the purpose of making profits by communicating information and providing convenience for both parties such as sellers and buyers, service providers and service recipients. Although some party members and cadres do not directly operate businesses or set up enterprises, they engage in paid intermediary activities in violation of regulations and make profits in the middle. This is also a form of engaging in profit-making activities in violation of regulations, which can easily promote the unhealthy atmosphere of not separating officials from businessmen and competing for profits with the people, disrupt the order of the market economy, affect the impartiality of party members and cadres, and even induce the abuse of power for personal gain and power-for-money transactions.
4. Illegal part-time jobs
The "Regulations" stipulate that those who violate the relevant provisions by working part-time in economic organizations, social organizations and other units, or who have been approved to work part-time but obtain additional benefits such as salaries, bonuses, allowances, etc., shall be given corresponding sanctions.
The term "economic organizations" and "social organizations" here include various types of enterprises (companies), public institutions, industry organizations, intermediary agencies, social groups, etc. Illegal part-time jobs, including part-time jobs (including honorary positions) in various economic and social organizations without approval, as well as part-time jobs that have been approved but receive remuneration in violation of regulations. "Additional benefits" include remuneration, bonuses, allowances, as well as remuneration in various names such as consultant fees, consulting fees, etc.
Party members and cadres who work part-time in violation of regulations are not conducive to impartiality, and they may take advantage of their power or work to turn the public into private and harm the public and private through part-time jobs. At the same time, party members and cadres who work part-time in violation of regulations and participate in business activities may also lead to unequal competition among economic organizations and disrupt economic order.
The CPC Central Committee and the State Council have repeatedly issued orders prohibiting cadres from working part-time or part-time in economic organizations, social organizations, and other units in violation of regulations or taking part-time jobs for remuneration. The Circular on the Prohibition of Leading Cadres of Party and Government Organs from Concurrently Holding Leading Positions in Social Organizations issued by the General Office of the CPC Central Committee and the General Office of the State Council in July 1998, the Opinions on Further Regulating the Issue of Party and Government Leading Cadres Holding Part-time Positions in Enterprises issued by the Organization Department of the CPC Central Committee in October 2013, and the Regulations on the Management of Leading Cadres Holding Part-time Positions in Leading Cadres issued by the Organization Department of the CPC Central Committee over the years have all made clear provisions on the issue of leading cadres holding part-time positions in social organizations and enterprises, and should be strictly observed.
5. Party and state organs running businesses in violation of regulations
The "Regulations" stipulate that if a party or state organ engages in business or runs an enterprise in violation of the relevant regulations, the person directly responsible and those with leadership responsibility shall be punished accordingly.
Where Party and state organs engage in business or run enterprises in violation of regulations, affecting the fair performance of official duties by Party and state organs, and harming the image of Party and state organs, the relevant responsible personnel shall be held accountable.
Source: Hami Discipline Inspection and Supervision