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Highlights of the Eleventh Amendments of the PRC Criminal Law: Updates and Clarifications on the Penalties for Duty-related Crimes Committed by Non-state Functionaries

2020.12.31 YIN, Xiao (Benjamin)、MA, Disheng

On December 26, 2020, the 24th meeting of the Standing Committee of the 13th National People’s Congress passed the Eleventh Amendments of the PRC Criminal Law (the “Amendment”), with 13 new clauses added and modifications to 34 of the original clauses. It is worth noting that the Amendment updates the penalties for duty-related crimes committed by non-state functionaries (the “Duty Crimes of Non-state Staff”) under the PRC Criminal Law amended in 2017 (the “Criminal Law 2017”), including the crime of accepting bribes by non-state functionaries under Article 163, the crime of embezzlement under Article 271, and the crime of misappropriation of funds under Article 272. Such modifications further regulate the potential criminal penalties for employees of private companies, enterprises or other entities while involving the Duty Crimes of Non-state Staff and indicate the increasing ambition of legislators to combat such crimes.


I. Comparisons on the Amendment of Articles

 

Compared to the Criminal Law 2017, the Amendment mainly revises the range of the sentence, the standard of the sentence and the types of additional penalties, which is no different to the second draft published on October 21, 2020. The specific modifications are as follows:


The Criminal Law 2017

The Amendment

Article 163

[Crime of Accepting Bribes by Non-state Functionaries] Where an employee of any company, enterprise, or other entity asks for or illegally accepts properties from other persons thereby taking advantage of their job position, and seeks benefits for other persons, and in a case whereby the properties involved are of a relatively large amount, he shall be sentenced to a fixed-term imprisonment of not more than five years or criminal detention. If the amount is huge, he shall be sentenced to a fixed-term imprisonment of not less than five years and confiscation of property.

  Where an employee of any company, enterprise, or any other entity, during an economic exchange, accepts kickbacks and commission charges in various forms thereby taking advantage of their job position in violation of the provisions of the state for his personal ownership, he shall be punished in accordance with the provisions of the preceding paragraph.

  Anyone engaging in public services in any state-owned company, enterprise or other state-owned entity and anyone assigned by a state-owned company, enterprise and other state-owned entity to a non-state-owned company, enterprise, and other entity to engage in public service, who has committed the acts mentioned in the two preceding paragraphs, shall be convicted and punished in accordance with Articles 385 and 386 of this Law.


Article 163       

[Crime of Accepting Bribes by Non-state Functionaries] Where an employee of any company, enterprise, or other entity asks for or illegally accepts properties from other persons taking advantage of job position, and seeks benefits for other persons, and in a case whereby the properties involved are of a relatively large amount, he shall be sentenced to not more than three years of fixed-term imprisonment or criminal detention. If the amount is huge or there is any other serious circumstance, he shall be sentenced to a fixed-term imprisonment of not less than three years and no more than ten years and shall also be fined. If the amount is especially huge, or there is any other especially serious circumstance, he shall be sentenced to a fixed-term imprisonment of not less than ten years or life imprisonment and shall also be fined.

  Where an employee of any company, enterprise, or any other entity, during an economic exchange, accepts kickbacks and commission charges in various forms thereby taking advantage of job position in violation of the provisions of the state for his personal ownership, he shall be punished in accordance with the provisions of the preceding paragraph.

  Anyone engaging in public service in any state-owned company, enterprise or other state-owned entity and anyone assigned by a state-owned company, enterprise and other state-owned entity to a non-state-owned company, enterprise, and other entity to engage in public service, who has committed the acts mentioned in the two preceding paragraphs, shall be convicted and punished in accordance with Articles 385 and 386 of this Law.

Article 271

[Crime of Embezzlement] Where an employee of any company, enterprise, or any other entity who, taking advantage of his position, unlawfully takes possession of money or property of the entity, if the amount is relatively large, he shall be sentenced to a fixed-term imprisonment of not more than five years or criminal detention; if the amount is huge, he shall be sentenced to a fixed-term imprisonment of not less than five years and may also be sentenced to confiscation of property.

  If an employee who is engaged in public service in a State-owned company, enterprise, or any other State-owned entity or if a person who is assigned by a State-owned company, enterprise or any other State-owned entity to a company, enterprise or any other entity that is not owned by the State to engage in public service, commits the acts mentioned in the preceding paragraph, he shall be convicted and punished in accordance with the provisions of Article 382 or 383 of this Law.

Article 271

[Crime of Embezzlement] Where an employee of any company, enterprise, or any other entity who, taking advantage of his position, unlawfully takes possession of money or property of the entity, if the amount is relatively large, he shall be sentenced to not more than three years of fixed-term imprisonment or criminal detention. If the amount is huge or there is any other serious circumstance, he shall be sentenced to a fixed-term imprisonment of not less than three years and no more than ten years and shall also be fined. If the amount is especially huge, or there is any other especially serious circumstance, he shall be sentenced to a fixed-term imprisonment of not less than ten years or life imprisonment and shall also be fined.

  If an employee who is engaged in public service in a State-owned company, enterprise, or any other State-owned entity or if a person who is assigned by a State-owned company, enterprise or any other State-owned entity to a company, enterprise or any other entity that is not owned by the State to engage in public service commits the act mentioned in the preceding paragraph, he shall be convicted and punished in accordance with the provisions of Article 382 or 383 of this Law.

Article 272

  [Crime of Misappropriation of Funds] Any employee of a company, enterprise or any other entity who, taking advantage of his position, misappropriates the funds of the entity for personal use or to loan them to another person, and if the amount is relatively large and the funds are not repaid at the expiration of three months, or if the funds are repaid before the expiration of three months but the amount involved is relatively large and the funds are used for profit-making activities or for illegal activities, he shall be sentenced to a fixed-term imprisonment of not more than three years or criminal detention. If the amount involved is huge, or if it is relatively large but is not returned, he shall be sentenced to a fixed-term imprisonment of not less than three years but not more than ten years.

  If an employee engaged in public service in a State-owned company, enterprise or any other State-owned entity or any person who is assigned by a State-owned company, enterprise, or any other State-owned entity to a company, enterprise or any other entity that is not owned by the State to engage in public service commits any act mentioned in the preceding paragraph, he shall be convicted and punished in accordance with the provisions of Article 384 of this Law.



Article 272

  [Crime of Misappropriation of Funds] Any employee of a company, enterprise or any other entity who, taking advantage of his position, misappropriates the funds of the entity for personal use or for loaning them to another person, if the amount is relatively large and the funds are not repaid at the expiration of three months, or if the funds are repaid before the expiration of three months but the amount involved is relatively large and the funds are used for profit-making activities or for illegal activities, shall be sentenced to a fixed-term imprisonment of not more than three years or criminal detention. If the amount involved is huge, he shall be sentenced to a fixed-term imprisonment of not less than three years but not more than seven years. If the amount involved is especially huge, he shall be sentenced to a fixed-term imprisonment of not less than seven years.

  If an employee who is engaged in public service in a State-owned company, enterprise or any other State-owned entity or any person who is assigned by a State-owned company, enterprise, or any other State-owned entity to a company, enterprise or any other entity that is not owned by the State to engage in public service commits any act mentioned in the preceding paragraph, he shall be convicted and punished in accordance with the provisions of Article 384 of this Law.

  If a person commits any act mentioned in Paragraph One and returned all the misappropriated funds before the prosecution is filed, he may be given a lighter or mitigated penalty. And if the crime is relatively light, the person may be given a mitigated penalty or exempted from penalty.


II. Main Highlights



1. Raising of the Maximum Penalty


The maximum penalties under the Criminal Law 2017 for the following crimes committed by a non-state functionary are: a fixed-term imprisonment of 15 years for accepting bribes or embezzlement and a fixed-term imprisonment of 10 years for misappropriation of funds. After modification by the Amendment, for a case in which the amount involved is especially huge or there is any other especially serious circumstance, the non-state functionary charged with the crime of accepting bribes or the crime of embezzlement could be sentenced to life imprisonment, and those charged with misappropriation of funds could be sentenced to a fixed-term imprisonment of a maximum of 15 years. Such modification reflects the legislators’ motivation to protect the economic order and is also inseparable from the advocacy of promoting and optimizing the business environment.


2. Increase of Sentence Tiers


Compared to the penalty tiers applicable to the three Duty Crimes of Non-state Staff in the Criminal Law 2017, the Amendment adds a third tier of penalty applicable to the circumstances where: “the amount is especially huge”, on top of the original two tiers applicable to the amounts “relatively large” and “huge”. For the crimes of accepting bribes by a non-state functionary and of embezzlement committed by a non-state functionary, the border of the first and second tier of penalty is lowered from a fixed-term imprisonment of five years to three years, and the maximum penalty of the second tier is adjusted to a fixed-term imprisonment of ten years, serving also as the border between the second and third tier of penalty. As for the crime of misappropriation of funds, the upper limit of the original second tier is lowered from a fixed-term imprisonment of ten years to seven years, serving also as the border between the second and third tier.


3. Diversification of Sentencing Criterion


The Criminal Law 2017 sets the amount involved as the only sentencing criterion for the crime of accepting bribes and the crime of embezzlement committed by a non-state functionary. The Amendment supplements other considerations into the sentencing criterion, which include  “other serious circumstances” and “other especially serious circumstances” as part of the  sentencing criterion for the two crimes. The supplementation makes the sentencing criterion more diversified and increases the punishment for the crimes. In addition, the Criminal Law 2017 takes the amount involved “relatively large and not returned” as one of the most serious circumstances of the crime of misappropriation of funds, whereas the Amendment removes such circumstances and (i) clearly lists the return of the misappropriated funds before prosecution as the statutory circumstances of commuting the punishment (i.e., lenient or mitigated punishment); and (ii) adds that if the crime is minor, a mitigated or exempted punishment may be rendered, which aims to promote the criminals to actively return the funds and remedy the adverse effects of their criminal acts, as well as to protect the interests and normal operation of economic entities.


4. Changes to the Types of Additional Penalties


The Amendment changes the additional penalty for the crime of accepting bribes by a non-state functionary and the crime of embezzlement from the confiscation of property under the Criminal Law 2017 to a fine and adds such additional penalty to every tier of punishment. Compared to the confiscation of property, the actual execution of the fines is easier and normally involves a simpler property relationship. Therefore, such modifications substantially increase the economic cost of crimes and has a greater significance for the prevention and punishment of the crime.


III. Comments on the Main Points


1. Standard of Prosecution


For the Duty Crimes of Non-state Staff, the standard of prosecution for individuals is mainly in accordance with the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on the Issues of Application of Law in Handling the Criminal Cases of Corruption and Bribery published on April 18, 2016, and the regulation of the original standards are all based on the penalty under the Criminal Law 2017. The contents modified by the Amendment would inevitably demand further updates of the relevant departments on the original interpretations and regulations, such as the adjustment to the standard of “relatively large”, “huge” and “especially huge”, and the clarification of the circumstances which are “serious” or “especially serious”.


2. Issues of Jurisdiction


Since the maximum penalty for the crime of accepting bribes by a non-state functionary and the crime of embezzlement is raised to life imprisonment by the Amendment, in such cases whereby life imprisonment may be imposed, according to Article 21 (i.e., stipulation on the territorial jurisdiction) of the PRC Criminal Procedure Law, the responsibility of the relevant investigation, prosecution, trial and other works would be inevitably undertaken by the municipal public security, the municipal people’s procuratorate (or its branch), and the intermediate people’s court.


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