Client Alert

China's New Anti-Corruption Agency Will Wield Broad Powers

22 Mar 2018

On March 20, 2018, China's legislature passed the Supervision Law, granting extremely broad investigative powers to a new anti-corruption agency – the National Supervision Commission (“NSC”) – established by constitutional amendment earlier this month.  Effective immediately, the Supervision Law will allow the NSC to centralize various supervisory and anti-corruption responsibilities previously held by different government agencies and the Chinese Communist Party (“CCP”).  This is a significant development that will change the anti-corruption regulatory and enforcement landscape in mainland China.

A. The NSC’s Responsibilities

The NSC is tasked with investigating criminal, ethical and professional violations committed by “state functionaries who exercise public powers.” This mandate includes:

  • Officials across government branches;
  • Public institution administrators and managers in education, scientific research, medicine, and other fields;
  • Managers of State-owned Enterprises; and
  • Numerous other types of state personnel.

Notably, the NSC will be responsible for investigating regardless of whether or not the subject is a member of the CCP. Effectively, this will unify the investigative roles previously divided between the People’s Procuratorate and the CCP’s Central Commission for Discipline Inspection (“CCDI”). Yang Xiaodu, deputy anti-corruption chief at the latter agency and a trusted aide to President Xi Jinping, was appointed head of the NSC by the National People’s Congress on March 18, 2018.

B. Expansive Powers

The Supervision Law contemplates extremely broad investigative powers for the NSC. These include the power to:

  • require entities and individuals to provide evidence upon request;
  • use various means to investigate and collect evidence (including technical surveillance);
  • detain suspects for up to three months (extendable for another three months) to provide assistance to the NSC in an investigation;
  • seize or freeze a suspect’s assets;
  • refer the case to the People’s Procuratorate for prosecution; and
  • cooperate with international agencies investigating corruption matters (such as in an international hunt for fugitives).

C. How Will the NSC Wield Its Powers?

With its broad array of powers, the NSC will be well equipped to continue China’s anti-corruption campaign. Many have noted, however, that there also is the potential for abuse of human and legal rights. Businesses operating in China should carefully observe how the NSC chooses to enforce the Supervision Law in practice. And companies should be mindful that, even if they are not likely to be targeted by the NSC for investigation, they may need to respond to NSC requests for assistance.

For more information about recent developments relating to the regulatory environment in China, please contact us.



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