Enforcing Individual Technical Confidentiality Covenants under Chinese Labor Law
Enforcing individual technical confidentiality covenants under PRC law relies on explicit technical boundaries, notarized logs, and parallel civil actions.
Public Security Bureau Criminal Referral
Meaning
An administrative transition process through which regulatory bodies transfer an investigation to the local police after discovering evidence of criminal conduct during a routine compliance audit or administrative inspection. A public security bureau criminal referral shifts a case from civil administrative fines to the criminal justice system, where individuals can face imprisonment and corporate entities face severe criminal penalties. This process is governed by strict statutory rules that dictate when civil officers must hand over files to the police.
Statutory Trigger
Under the PRC Criminal Law, administrative agencies like the State Taxation Administration or the Administration for Market Regulation must refer cases when the value of the tax evasion, commercial fraud, customs smuggling, or environmental contamination exceeds statutory limits. Civil inspectors lose jurisdiction once these criminal thresholds are crossed. This transition is mandatory and cannot be settled through administrative compromise.
Corporate Implication
Once a case enters the criminal system, the company faces bank account freezes, asset seizures, operational suspensions, and the detention of its legal representative. The public security bureau criminal referral means that negotiations for a civil settlement are no longer possible. The firm must prepare for a formal criminal investigation and potential prosecution.
Defense Strategy
To manage this severe risk, enterprises must engage specialized criminal defense counsel to interact with the police investigators. The defense focuses on challenging the valuation of the alleged damage or demonstrating that the corporate executives acted without criminal intent. Because the evidentiary standards in criminal cases are much higher than in administrative audits, demonstrating robust corporate compliance programs can sometimes help in securing a non-prosecution decision or a reduced charge.
This legal approach is critical for protecting the survival of the enterprise during a criminal investigation.