Recently, there have been some surprising convictions in China based on the practices of a private investigation company, even though the company apparently did nothing illegal.
This is alarming news for companies outside of China that perform investigations on people and businesses in the country and who abide by the Foreign Corrupt Practices Act. What will it mean for companies hired to investigate companies and individuals in China? Will investigators still do their best to find the truth – or would the fear of conviction deter them?
This post discusses the pitfalls of performing private investigation services in China – a country that doesn’t always enjoy the freedom to investigate.
The owners of the investigative company ChinaWhys received convictions from the Chinese government based on their internal investigations into companies in China. The owners (British national Peter Humphrey and his wife Yu Yingzeng) were convicted of trafficking the personal information of citizens of China between 2009 and 2013. The goal of the investigation was to reduce the risk for businesses in the country by gathering intelligence, researching partners, and performing background checks on employees before companies chose to hire them – the same services that we perform every single day (in the USA) at Martin Investigative Services.
Chinawhys was convicted for “illegal practices” in gaining the personal household registrations of Chinese residents. Humphrey received a prison sentence of two and a half years, as well as a fine. His wife received a sentence of two years.
The convictions are of particular concern to all companies that with production in China, as these investigative services help assure a level playing field. When standard security checks put a company’s name in the headlines as being involved in a trial or conviction, China becomes more and more of a wildcard. There will likely be fewer private investigation firms operating in China after this.
Integrity wins out in the end
Those who are considering hiring an investigative firm need to make sure that they are working with a company that prides itself on uncovering the truth and providing honest results. When companies do their duty in the United States, as long as they are operating within the law, they have nothing to fear.
China still has a long ways to go in terms of making private investigation a safe practice for those operating in the country, which is a real shame. Hopefully, things will change soon, as it is important to follow and enforce the anti-corruption laws in a large and powerful nation with a burgeoning economy.
We recently traveled throughout China, visiting both Beijing and Shanghai. While there, we took the time to visit three of the top private investigation firms. All three were certified and actually perform work for government officials. We also visited well-known law firms whose corporate offices are based in the United States and who have their own in-house private investigators. This unique dynamic enables us to have solid “boots on the ground in China”, so we can provide guidance to our client base that has investigative needs in China.