China-US Economic Ties

China Fines Raided US Firm $1.5 Million for ‘Unapproved’ Work

 

China slapped a $1.5 million fine on US investigations firm Mintz Group for doing “unapproved statistical work”, after raiding its office in Beijing and detaining all of its local staff earlier this year.

The raid on Mintz’s office in March had marked the start of a broad crackdown on consultancy and due diligence firms in China that saw similar raids on offices of top US firms including Capvision Partners and Bain & Company’s office in Shanghai.

Foreign business lobbies said the crackdown damages investor confidence in the world’s second-largest economy.

 

Also on AF: China Looking Into Second National For ‘Spying’ For US

 

The fine on Mintz was imposed by Beijing Municipal Bureau of Statistics, which said, in a ruling dated July 5, that Mintz had carried out “foreign-related statistical investigations” without seeking and obtaining approvals.

In a further notice on its website on July 14, the bureau said Mintz conducted 37 such investigations from March 2019 to July 2022.

As punishment, the bureau confiscated 5.34 million yuan of the firm’s “illegal proceeds” and imposed an administrative penalty of an equivalent amount, resulting in a total fine of about $1.5 million.

As per Mintz’s website, its services include background checks on potential business partners and new hires, fact gathering for lawsuits and internal investigations.

Weeks after the raid on its office, multiple sources had said Mintz was looking into the possible use of forced labour in supply chains linked to Xinjiang in days prior to Beijing’s crackdown.

 

Increasing suspicion

Mintz has previously said it is licensed to conduct legitimate business in China and that it has always operated lawfully.

The firm has 60 days to file an appeal and six months to file an administrative suit. It did not respond to a request for comment.

The fine comes as China grows increasingly suspicious of its engagement with the West, in line with a call by President Xi Jinping to place national security over everything.

This week, Chinese authorities said they were investigating a second citizen for spying for the US Central Intelligence Agency (CIA).

In July, Beijing also updated an anti-espionage law that broadened the definition of spying and banned the transfer of information related to national security.

The US has said the law would would make foreign companies operating in the country vulnerable to penalties over regular business activities.

In recent years, China has also amended a host of laws to restrict foreign access to its data, such as requiring data to be stored in Chinese servers and requiring companies with users’ data to undergo a security review before listing shares overseas.

 

  • Reuters, with additional editing by Vishakha Saxena

 

Also read:

 

Mintz Executive Caught in China’s Growing Web of Exit Bans

 

Eyeing Top Dollar, China Consulting Firms Tested Beijing’s Limits

 

China Slaps Deloitte With $31m Fine Over Huarong Audit

 

China Cybersecurity Rules Seen as Big Risk For Finance Firms

 

Top Chinese Financial Data Provider, Wind, Cuts Foreign Access

 

China’s Security Focus Undermining Its Economic Goals

 

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

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