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©2022LawBusinessResearchLtd

the

International

Investigations

Review

TwelfthEdition

Editor

NicolasBourtin

Contents

©2022LawBusinessResearchLtd

the

International

InvestigationsReview

TwelfthEdition

ReproducedwithpermissionfromLawBusinessResearchLtd

ThisarticlewasfirstpublishedinJuly2022

ForfurtherinformationpleasecontactNick.Barette@thelawreviews.co.uk

Editor

NicolasBourtin

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i

Contents

©2022LawBusinessResearchLtd

CONTENTS

PREFACEv

NicolasBourtin

Chapter1

THEEVOLUTIONOFTHEROLEOFTHEFORENSICACCOUNTANTIN

INTERNATIONALINVESTIGATIONS1

StephenPetersandNatalieButcher

Chapter2

BIGDATA,TECHNOLOGYANDTHECHANGINGFACEOF

FORENSICACCOUNTING8

GwynnHopkinsandTavishMacLean

Chapter3

AUSTRALIA16

DennisMiralis,PhillipGibson,JasminaCeicandKartiaZappavigna

Chapter4

CANADA30

LéonHMoubayedandCoreyOmer

Chapter5

CHINA45

AlanZhou,JackyLiandJennyChen

Chapter6

COLOMBIA55

CarolinaPardo,AngelicaNavarroandLuisCastell

Chapter7

ENGLANDANDWALES66

StuartAlfordQC,MairWilliamsandHarrietSlater

Chapter8

FRANCE83

AlexandreBisch

Chapter9

GREECE93

IliasGAnagnostopoulosandJerinaZapanti

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Chapter10

ITALY101

MarioZanchetti

Chapter11

JAPAN121

YasuhikoFujitsuandChihiroTsukada

Chapter12

PORTUGAL131

JoãoMatosViana,JoãoLimaClunyandTiagoCoelhoMagalhães

Chapter13

SINGAPORE146

JoyTan,JennyTsinandOngPeiChin

Chapter14

SOUTHKOREA161

Seong-JinChoi,Tak-KyunHongandKyleJChoi

Chapter15

SWITZERLAND170

PeterBurckhardt,GeorgeAyoub,NinaLPakaandMariamOueslati

Chapter16

TURKEY181

FikretSebilcioğlu,OkanDemirkanandBegümBiçerİlikay

Chapter17

UNITEDSTATES190

NicolasBourtinandSteveAHsieh

Appendix1

ABOUTTHEAUTHORS207

Appendix2

CONTRIBUTORS’CONTACTDETAILS223

iii

©2022LawBusinessResearchLtd

PREFACE

Initssecondyear,theBidenadministrationhasmadeclearitsprioritisationofwhite-collarprosecutions.Thisincludeschangesinpolicyandguidance,suchasarenewedfocusonindividualaccountability,anincreasedconcernwithcorporaterecidivism,andgreaterscrutinyoftheuse,andrepeateduse,ofdeferredprosecutionagreements(DPAs)andnon-prosecutionagreements(NPAs).Theadministrationhasannouncedplansnotonlytoredistributeexistingresourcestoprosecutionsofcorporatecrimebuttoincreaseresources,particularlythroughthehiringofmorewhite-collarprosecutorsandinvestigativeagents.Althoughrecoveryfromthecovid-19pandemicandmorerecentlytheconsequencesoftheRussia–Ukrainewarhaveslowedtheadministration’simplementationofthesecorporateenforcementpriorities,USandnon-UScorporationsalikewillcontinuetofaceincreasingscrutinybyUSauthorities.

ThetrendtowardsmoreenforcementandharsherpenaltieshasbynomeansbeenlimitedtotheUnitedStates;whiletheUSgovernmentcontinuestoleadthemovementtoglobalisetheprosecutionofcorporations,anumberofnon-USauthoritiesappeardeterminedtoadopttheUSmodel.Parallelcorporateinvestigationsinseveralcountriesincreasinglycompoundtheproblemsforcompanies,asconflictingstatutes,regulations,andrulesofprocedureandevidencemakethepathtocomplianceatreacherousone.Whatismore,governmentauthoritiesforgetheirownprosecutorialalliancesandshareevidenceor,conversely,havetheirownrivalriesandblocktheexportofevidence,furthercomplicatingacompany’sdefence.Thesetrendsshownosignofabating.

Asaresult,corporatecounselaroundtheworldareincreasinglycalledupontoadvisetheirclientsontheimplicationsofcriminalandregulatoryinvestigationsoutsidetheirownjurisdictions.Thiscanbeadauntingtask,asthepracticeofcriminallaw–particularlycorporatecriminallaw–isnotoriousforfollowingunwrittenrulesandpracticesthatcannotbegleanedfromasimplereviewofacountry’scriminalcode.Ofcourse,nothingcanreplacetheconsideredadviceofanexpertlocalpractitioner,butacomprehensivereviewofcorporateinvestigativepracticesaroundtheworldwillfindawideandgratefulreadership.

TheauthorswhohavecontributedtothisvolumeareacknowledgedexpertsinthefieldofcorporateinvestigationsandleadersoftheBarsoftheirrespectivecountries.Wehaveattemptedtodistiltheirwisdom,experienceandinsightaroundthemostcommonquestionsandconcernsthatcorporatecounselfaceinguidingtheirclientsthroughcriminalorregulatoryinvestigations.Underwhatcircumstancescanthecorporateentityitselfbechargedwithacrime?Whatarethepossiblepenalties?Underwhatcircumstancesshouldacorporationvoluntarilyself-reportpotentialmisconductonthepartofitsemployees?Isitarealisticoptionforacorporationtodefenditselfattrialagainstagovernmentagency?Andhowdoesacorporationmanagethedelicateinteractionswithemployeeswhoseconductis

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atissue?TheInternationalInvestigationsReviewanswersthesequestionsandmanymore,andwillserveasanindispensableguidewhenyourclientsfacecriminalorregulatoryscrutinyinacountryotherthanyourown.Andwhileitwillnotqualifyyoutopractisecriminallawinaforeigncountry,itwillhighlightthemajorissuesandcriticalcharacteristicsofagivencountry’slegalsystemandwillserveasaninvaluableaidinengaging,advisinganddirectinglocalcounselinthatjurisdiction.Weareproudthat,inits12thedition,thispublicationfeaturestwooverviewsandcovers15jurisdictions.

Thisvolumeistheproductofexceptionalcollaboration.Iwishtocommendandthankourpublisherandallthecontributorsfortheirextraordinarygiftsoftimeandthought.Thesubjectmatterisbroadandtheissuesraisedaredeep,andaconcisesynthesisofacountry’slegalframeworkandpracticewaschallengingineachcase.

NicolasBourtin

Sullivan&CromwellLLP

NewYork

July2022

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Chapter5

CHINA

AlanZhou,JackyLiandJennyChen1

IINTRODUCTION

GovernmentinvestigationsinChinacanbegenerallydividedintotwomajorcategories:criminalinvestigationsandadministrativeinvestigations,withtheinvestigativepowerbeingvestedamongmultipleauthorities.Fromacriminalperspective,authoritieswithcriminalinvestigativepowersinclude:

apublicsecuritybureaus(PSBs),responsibleforinvestigations,criminaldetentions,the

executionofarrestsandpreliminaryinquiriesincriminalcases;2

bthepeople’sprocuratorates(procuratorates),responsibleforprosecutions,theapproval

ofarrestsandconductinginvestigationsintocriminalviolationsrelatingtojudicialfunctionaries’infringementoncitizens’rightsorjudicialjustice;

csupervisorycommissions,whichsuperviseallpublicofficials,investigateduty-related

illegalactivitiesandoffences,andcarryoutanti-corruptionwork;

dnationalsecurityauthorities,whichinvestigateandhandlecasesofcrimesthat

compromisenationalsecurity,performingthesamefunctionsandwiththesamepowersasPSBs;

emilitarysecurityauthorities,whichmayexercisetherighttoinvestigatecriminalcases

occurringinthemilitary;

ftheChinaCoastGuard,alawenforcementbodythatsafeguardsmarinerightsand

exercisestherighttoinvestigatecriminalcasesoccurringatsea;and

gprisons.

Fromanadministrativeperspective,authoritieswithinvestigativepowersinclude:atheStateAdministrationforMarketRegulation(SAMR),whichoverseesmarket

regulation,foodsafety,healthcarecompliance,advertisementviolations,competitionviolations,commercialbribery,anti-monopoly,etc.;anditssubsidiarybureaus,includingadministrationsformarketregulations(AMRs)attheprovincial,municipalandcountylevels;

btheNationalDevelopmentandReformCommissionanditssubsidiarybureaus,

responsibleforoverallplanningandcontrolofthenationaleconomy,andinvestigatingprice-relatedviolations;

ctheChinaSecuritiesRegulatoryCommission(CSRC)anditssubsidiarybureaus,

responsiblefortheadministrationofsecuritiesandinvestigatingsecuritiesfraud;

1AlanZhouandJackyLiarepartnersandJennyChenisofcounselatGlobalLawOffice.

2PSBsareempoweredwithdualinvestigativeauthoritiesatbothcriminalandadministrativelevels.

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dPSBs,whicharealsoresponsibleforinvestigatingadministrativeviolationsimpacting

publicsecurity;

ethePeople’sBankofChina(PBOC)anditssubsidiaries,responsibleforcarrying

outmonetarypolicyandregulationoffinancialinstitutionsinmainlandChina,andregulatingmoneylaunderingactivities;and

fotheradministrativeauthorities,suchastheStateTaxationAdministration,the

Customs,andtheEnvironmentalProtectionBureaus.

Forcriminalinvestigations,theauthoritiesareempoweredto:

ainterrogatethecriminalsuspect;

binterviewwiththewitnesses;

cinspectorexaminethesites,objectsandpersonsrelevanttoacrime(including

dawnraids);

dsearchthecriminalsuspectandtheirbelongingsandresidence,andanyonewhomight

behidingacriminalorcriminalevidence,aswellasotherrelevantplaces;

esealuporseizethepropertyanddocuments;and

faccessorfreezeacriminalsuspect’sdeposits,remittance,bonds,stocks,shares,funds

orotherproperty.

Foradministrativeinvestigations,theauthoritiesaregenerallyempoweredto:aconducton-siteinspections(includingdawnraids);

binterviewthepartiesinvolvedinthesuspectedviolation;

crequirethepartiesinvolvedinthesuspectedviolationtoproducerelevant

supportingdocuments;

dreviewandreproducedocumentsandmaterials;

esealuporseizeproperty;and

faccessbankaccounts.

Governmentinvestigationsmaybetriggeredbyroutineinspections,whistle-blowingreports,accusations,complaints,self-disclosure,transfersofcasesbetweenauthoritiesorevenmediaexposurerelatedtocertaintypesofmisconduct.Onceagovernmentinvestigationhascommenced,theresponsibleauthoritieswillexercisetheirdiscretionastotheinvestigationmethods,dependingonthenatureoftheallegedmisconductandtheresourcesavailableforinvestigation.

Amongtheenumeratedinvestigationmethods,dawnraidsareadoptedquitefrequentlybygovernmentauthorities.Adawnraidmaybecarriedoutiftheauthoritiesbelievethatpriornoticeorwarningcouldpossiblyleadtothedestructionorfalsificationofevidence.Duringagovernmentdawnraid,theofficerswillshowupwithoutpriornotice,usuallyinthemorningatthestartoftheworkingdayatthepredeterminedsites.Severalsitescanbetargetedsimultaneouslywithinoracrossprovincesandadawnraidcanlastforseveraldays.Governmentauthoritiesmayhavealreadycollectedevidencethroughperipheralinvestigationsbeforeinitiatingadawnraidorsometimesadawnraidcouldbetriggeredunderexigentcircumstances.

Thetimeframesforgovernmentinvestigationsareusuallysetintherespectivelawsandregulationsofthedifferentauthorities.Companiesunderinvestigationareobliged

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tocooperatewiththeauthoritiesanditiscrucialtotimelyevaluatethepotentiallegalimplicationsandconductnecessaryinteractionswiththeauthoritiestocontainthelegalriskexposuresandtoachieveafavourableresult.

IICONDUCT

iSelf-reporting

Article110oftheCriminalProcedureLawimposesageneralobligationonindividualsandentitiestoreportanysuspectedcrimesorcriminalactivity,butonliteralinterpretationandfromageneralpublicperspective,therequirementisconstruedtomeanreportingthecriminalactivitiesofothers,ratherthanself-reporting,andnolegalconsequencesareclearlystipulatedforfailingtoself-report.Article67oftheCriminalLawtosomeextentencouragesself-reportingofcriminalactivitybystipulatingmitigationorevenexemptionfromthecriminalpenaltiesundercircumstancesofvoluntaryconfession.SimilarprinciplescouldalsobereflectedinsomeotherprovisionsprescribedintheCriminalLaw.Forexample,Article164oftheCriminalLawprovidesthat‘anybriberwhoconfessesthebriberyvoluntarilypriortoprosecutionmaybegivenamitigatedpunishmentorbeexemptedfrompunishment’.Article28oftheCounter-EspionageLawprovidesthat:

whoeverjoinsahostileorespionageorganisationabroadunderduressorinducementtoengageinactivitiescompromisingthenationalsecurityofChina,butthathonestlystatesthefacttoamissionofChinaabroadinatimelymanneror,afterhisorherreturnfromabroad,honestlystatesthefactdirectly,orthroughhisorheremployer,toanationalsecurityauthorityorapublicsecurityauthorityinatimelymannerandshowsrepentance,maybeexemptedfromlegalliability.

Fromtheadministrativelawperspective,self-reportingobligationsarescatteredinvariouslawsandregulations,mostlyrelatedtoviolationsthatmighthaveimpactonsocialsecurityandpublicwelfare,suchasfoodanddrugsafety,environmentalprotectionandcybersecurity.Forexample,Article47oftheFoodSafetyLawrequiresfoodmanufacturersorbusinessoperatorstoceasefoodmanufacturingorfoodbusinessoperations,andreporttothefoodsafetysupervisionandadministrationdepartmentsintheeventofafoodsafetyincidentwithpotentialrisks.Forotheradministrativeviolations,self-reportingisnowappearingmoreoftenasaprerequisiteincertainleniencyprogrammesforcompaniestoreceiveself-disclosureorcooperationcredit.Atypicalsituationisahorizontalmonopolyagreementcase,wherebusinessoperatorscouldchoosetoself-disclosetheviolationandprovideimportantevidenceinexchangeforlenienttreatment.

iiInternalinvestigations

Ingeneral,conductinginternalinvestigationsisnotastatutoryobligationinChina,unlessprescribedintheapplicableindustry-specificlegislation(mostlyinresponsetosafetyincidents).Forinstance,theAdministrativeMeasuresforMedicalDevice-RelatedAdverseEventMonitoringandRe-evaluationprovidesthat,afteridentifyingamedicaldevice-relatedadverseevent,marketingauthorisationholdersmustimmediatelyceasesalesandoperations,notifytheuser,inparallelwithconductinganinvestigationandself-inspectionofmanufacturingqualitycontrolsystems,andreportthefindingstothesupervisionauthorities. Inaddition,Chineseauthorities(oftenindustrysupervisionauthorities)mayinitiateenforcementactionsandrequirecompaniestoconductself-inspectionsandreport

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non-compliantactivities.Forinstance,inanadhocenforcementagainstcommercialbriberyinthehealthcareindustry,initiatedbytheAMRsinTianjinin2017and2018,companiesandmedicalinstitutionswererequiredtoconductself-inspectionsoncommercialbriberyandtakecorrespondingremedialactionsinthisregard.

Inpractice,internalinvestigationsareincorporatedintotheinternalcontrolmechanismbycompaniesforcompliancepurposes.Thecauseoftheactionsvariesineachcompanybutwhite-collarcrimeandfraud(e.g.,commercialbribery,bid-riggingandembezzlement)areusuallyamongthefocusesforthemajorityofcompaniesinChina.

Commonly,internalinvestigationsareundertakenbyin-housecounselsinthecompanyorexternallocalcounselsdependingonthenatureandseverityoftheissuesunderinvestigation.Themethodologyandprocessfortheseinternalinvestigationsusuallyincludedocumentreview,financialreviewandinterviewswithemployeesandotherpersonnel.Thekeyissuesduringinternalinvestigationsinvolvethelegalissueidentification,designandimplementationoftheinvestigationprocessanalysisbasedonthefindingsanddeterminingthesolutions.Notably,dueprocessandevidencepreservationareoftenoverlookedbycompanies,asitisverylikelythatthefactsandevidencegatheredunderinternalinvestigationmayendupinlabourarbitrationtribunalsorcourtforlitigationpurposesorbesubmittedtotheChineseauthorities.Therefore,howtopreservetheintegrityoftheinternalinvestigationandensuretheadmissibilityoftheevidenceshouldbecarefullyevaluatedduringthepreparationandimplementationoftheinternalinvestigation.

CompaniesinChinaalsocommonlyconductinternalinvestigationsinrelationtoforeignlawconsiderations,suchastheForeignCorruptPracticesAct(FCPA),butthispracticehasbeensubstantiallyimpactedbythenewlyenactedInternationalCriminalJudicialAssistanceLaw(ICJAL)inOctober2018,whichexpresslystipulatesthatinstitutions,organisationsandindividualsinChinamustnotprovidetoforeigncountriesevidencematerialsorassistanceprovidedforinthisLawwithouttheconsentofthecompetentChineseauthority.TheICJALappliestocriminalproceedingswithawidecoverageofactivitiespotentiallydeemedasassistingthecrimesprovidedfor.AnalysisofdifferenttypesofFCPAinvestigationsinChinaindicatesthat,aslongastheinvestigationcouldpotentiallyleadtoacriminalresolutionwiththeUSauthorities,theinvestigationremainswithinthezoneofdanger;further,thelikelihoodoftheapplicabilityoftheICJALonthecurrentFCPAinvestigationsissubstantiallyhighwithlegalimplicationstobeascertained.Therefore,itissuggestedthatcompaniesconsultwithcompetentlocalcounselinadvancetoaccessthelegitimacyofinternalinvestigationsandtoproperlyinteractwiththerelevantChineseauthorities.

iiiWhistle-blowers

CompaniesinChinaarenowbeingexposedtotherisksarisingfromthehighfrequencyofwhistle-blowercomplaints.Therighttoreportcrimesandotherlegalviolationsbycitizensiswellestablishedinprincipleinthelawsandregulations,suchastheConstitution,theCriminalProcedureLawandtheAnti-UnfairCompetitionLaw.Althoughthereiscurrentlynoconsolidatedlegalregimetoregulatewhistle-blowingreports,variousauthoritieshaverespectivelypromulgatedlegislationtoregulatewhistle-blowingreportsagainstcertaintypesofmisconductintheirdomain.Forinstance,theformerChinaFoodandDrugAdministration(nowtheSAMR)promulgatedtheMeasuresforRewardingWhistle-BlowingReportsAgainstFoodandDrugViolationsin2013,whichwaslaterrevisedin2017toincreasetheawardamountandclarifytherelevantproceduresandscope.

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Inpractice,toencouragereportingmisconduct,multipleauthoritieshavesetupreportinghotlinesandonlinegatewaystoreceivewhistle-blowingreportsfromthepublic.Forinstance,theStateSupervisoryCommissionisnowoperatinganadhoconlinechannelandhotline(12388)3forreceivingwhistle-blowingreportsagainstgovernmentofficials’duty-relatedcrimesormisconducteitherbyrealnameoranonymity(real-namereportingishighlyencouraged).Thenationalsecurityauthoritiesalsoencouragewhistle-blowingreportsmadetothedesignatedonlineplatformandhotline(12339).4Similarly,AMRsatalllevelshaveprovidedonlineandofflinechannelstoencouragethepublictoreportleadsregardingcompanymisconduct,andthehandlingproceduresandspecifictimelinesarepublishedandwellimplemented.On30July2021,theSAMRandtheMinistryofFinancejointlyissuedtheInterimMeasuresforRewardsforWhistle-blowerReportsofMajorViolationsintheFieldofMarketRegulation(effectivesince1December2021)toimprovethesystemofrewardingwhistle-blowingagainstmajorviolationsinthemarketregulationfield.

Withrespecttowhistle-blowers’protection,somespecificrules,suchastheRulesoftheSupremePeople’sProcuratorateonProtectingtheCitizens’Tip-offRights,wereformulatedtoprovideacomprehensivemechanismonbothsubstantiveandprocedurallevels,andtheSupremePeople’sProcuratorate,theMinistryofPublicSecurityandtheMinistryofFinancejointlyissuedtheSeveralProvisionsonProtectingandRewardingWhistle-BlowersofDutyCrimesin2016.

Strictconfidentialitythroughoutthehandlingprocessisthefoundationalrequirementimposedonauthoritiesthatreceiveanyreporting.Further,theauthoritiesneedtotakemeasures(i.e.,restrictingphysicalaccesstothereporterbythosebeingreported)toensurethesafetyofreportersandtheircloserelativeswhenevernecessary.Retaliationtowardswhistle-blowersisforbiddenandincursliabilityfortheimpositionoflegalpenaltiessuchasadministrativesanctions,criminaldetentionorimprisonment.

IIIENFORCEMENT

iCorporateliability

AdministrativeandcriminalcorporateliabilitiesarestipulatedintheCriminalLawandrelevantadministrativelawsandregulations.Forcriminalliabilities,amongthe469crimesprescribedbytheCriminalLaw,thereareapproximately150unitcrimesforwhichacompanycouldbequalifiedastheperpetrator,andfortheseunitcrimesacompanywillbeheldcriminallyliableif:

aacollectivedecisionhasbeenmadebythemanagementofthecompany,oranindividual

decisionbytherelevantresponsiblepersonnelonbehalfofthecompany,suchasthelegalrepresentative;and

bthecrimeiscommittedinthenameofthecompanyandtheillegalproceedsgoto

thecompany.

TheCriminalLawadoptsadualpunishmentsystemforunitcrime,whichmeansboththecompanyandtheresponsiblepersonsaresubjecttocriminalliability,withonlyafewexceptionsotherwiseprescribedintheCriminalLaw.

3Seewww.12388..

4Seewww.12389..

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Asforadministrativecorporateliability,thisderivedfromtheprovisionsoftherelevantadministrativelawsandregulations,suchastheUnfairCompetitionLaw,theAnti-MonopolyLawandtheAdvertisementLaw,coveringviolationssuchascommercialbribery,monopoly,companyillegaloperationandillegaladvertising.

Notably,forthesamemisconductcommittedbyacompany,thecriminalandadministrativeregimesaremutuallyexclusive.TheRegulationsontheTransferofSuspectedCriminalCasesbyAdministrativeLawEnforcementAgenciespromulgatedbytheStateCouncilin2001settheregulatoryframeworkfortheconversionbetweenadministrativeandcriminalcases.Aseriesofotherregulationshavebeenpromulgatedinthefollowingyearstofurtheraddresstheprocedureofconversion.Accordingtotheseregulations,whileinvestigatinganadministrativecase,iftheagencysuspectsthatthecaseshouldbeprosecutedasacriminalcasebasedonelementssuchasthemonetaryamountinvolved,thespecificfactpatternsortheconsequences,thenthecasemustbetransferredtoaPSBandthePSBwillexaminethecasestransferred.IfcriminalfactpatternsareidentifiedandthePSBdecidestoinvestigatethecaseforcriminalliability,itshallnotifytheadministrativeagencythattransferredthecaseinwriting.Ifthereisnocriminalfactpatternorthefactsareinsignificantandtheagencydecidesnottoprosecutethecase,itwillstatethereasons,notifytheadministrativeagencyandreturnthecase.Ontheotherhand,ifaPSBdiscoversthatacaseitisinvestigatingshouldnotbecriminallyprosecutedbuttheremaybeadministrativeliability,itshalltransferthecasetotherelevantadministrativelawenforcementagency.

iiPenalties

UndertheCriminalLaw,theonlysanctionapplicabletoacompanyisthemonetarypenalty,butanindividual’sliabilitiesforaunitcrimeincludepublicsurveillance,criminaldetention,imprisonment,themonetarypenalty,thedeprivationofpoliticalrights,deportation(inthecaseofforeignnationals)andeventhedeathpenalty.5

Penaltiesf