New agency and new law in China to crack down corruption

As a critical part of a series of reforms to China's anti-corruption system, the National Supervisory Commission (“Supervisory Commission”) was established to spearhead the campaign against illegal acts by anyone performing public duties in China. The Supervisory Commission was established at the 13th National People's Congress, following the pilots which were run in Shanxi, Beijing, and Zhejiang in 2016 and revisions to the PRC Constitution Law in 2018.

The Supervisory Commission and its local branches are mandated with three main functions: supervision, investigation and disposal (eg punishment) of the concerned illegal acts, the functions of which used to be diffused to several different agencies - former Ministry of Supervision, National Bureau of Corruption Prevention and the anti-corruption department of the Procuratorate.

The Supervisory Commission is more than the sum of its parts and has been given an elevated status by new legislation: it is the fourth pillar reporting directly to the People’s Congress and its standing committee, sitting alongside the State Council, the Supreme People’s Court, and the Supreme People’s Procuratorate. It is also the leading authority for the concerned illegal acts. For serious acts such as criminal acts, the Supervisory Commission may, after investigation, decide to submit the case to the Procuratorate for procuration.

The Supervisory Commission will focus on individuals who perform public functions such as State functionaries, communist party members, managers of State-owned enterprise and public institutions (like schools, hospitals, scientific research institutions and cultural institutions), and anyone authorized to perform public duties. The Supervisory Commission will also investigate, and detain, people in the private sector who are suspected of Offering bribes to these in public offence and/or colluding with them in the commission of bribery offences.

Whilst there remains uncertainty around how this new legislation will be implemented, the developments in recent years indicate that the anti-corruption campaign in China is intensifying and expanding, with a wider group of people potentially being affected. Companies with operations in China are advised to promptly review and solidify their compliance systems, conduct in-depth due diligence into business partners and keep a close eye on further developments in this area.