Background
The enterprise compliance non-prosecution system is a system under which prosecutors can, with respect to criminal cases involving enterprises suspected of committing corporate crimes or duty crimes in production and operation activities, order the enterprises to make compliance commitments and actively implement such commitments as appropriate taking into account the specific suspected crimes of the enterprises where they find that such enterprises are willing and able to establish an enterprise compliance system, and then make a non-prosecution decision to the enterprises after the compliance results of the enterprises have been accepted by third-party agencies, the system of which aims to promote enterprises to operate in compliance with laws and regulations, as well as reduce and prevent crimes committed by enterprises.
Recently, our client Company S was suspected of committing the crime of polluting the environment due to failure to collect and transit hazardous waste in accordance with the law during the production. In the course of prosecution, through our full communication with the procuratorate and the application from Company S, the procuratorate decided to initiate a third-party supervision and evaluation mechanism for Company S as to enterprise compliance. Based on the full investigation and understanding of the criminal issues involved by the enterprise, our lawyers actively assisted the enterprise in formulating and improving the corresponding rectification measures, helped the enterprise develop the enterprise compliance governance plan, and actively cooperated with the third-party agency in the check and acceptance. Recently, Company S successfully passed the acceptance check, and obtained a non-prosecution decision from the procuratorate in accordance with the law.
I. Case Background Introduction
Due to negligence in management, Company S failed to collect and have the industrial waste liquid treated in a timely manner by a qualified unit during the production, and directly dumped and discharged the same into the river. The industrial waste liquid was identified by the eco-environmental department to be hazardous waste according to national regulations. In July 2021, the public security organs investigated the enterprise on suspicion of polluting the environment, which case was later transferred to the procuratorate for prosecution.
II. Initiation of Enterprise Compliance Check
Company S has a good operation performance and a large number of employees, with its products enjoying a good brand reputation and a sound momentum of development. In case of being prosecuted, Company S would be labeled as “criminal”, which would have a material effect on its business operations and harm the interests of its employees, shareholders, investors, partners, and upstream and downstream enterprises. After a profound reflection on its own problems, Company S pleaded guilty to punishment, and actively made rectification, while applying for a third-party check of enterprise compliance by filing the Application for Third-Party Supervision and Evaluation over Enterprise Compliance with the procuratorate in response to the prosecutors’ suggestions and in accordance with such regulations as the Guiding Opinions on Establishing a Third-Party Supervision and Evaluation Mechanism for Compliance of Enterprises (For Trial Implementation).
Having taken into full account the case of Company S, and obtained approval from the superior, with respect to Company S, the procuratorate decided to initiate a third-party supervision and evaluation mechanism for enterprise compliance.
III. Enterprise Compliance Governance Process
Under the guidance of the superior, the procuratorate took the lead in inviting the industry and commerce federation, finance, taxation, market regulation, ecological environment and other departments to jointly form an ad hoc third-party supervision and evaluation agency (as supervisor) to check the problems existing in the production and operation of Company S. On this basis, Company S submitted the Enterprise Compliance Plan and the Enterprise Compliance Commitment Letter to the procuratorate, proposing a detailed compliance rectification plan and making a compliance commitment for the production and operation-related problems.
Since submitting the compliance governance application until late April 2022, to achieve comprehensive compliance, Company S had taken rectification measures one by one in strict accordance with the compliance plan and the compliance commitment. Specifically, it had established a data tracking and standardizing system, regulating data recording and tracking at all stages, and monitoring various environmental factors throughout the entire process; improved the production safety system, implementing special positions and responsibilities for production safety and environmental protection; established a training and assessment mechanism as well as a compliance reward and punishment mechanism, incorporating the assessment into the daily management indicators of the enterprise; and meanwhile, comprehensively identified various risks and hidden dangers of the enterprise, standardized the enterprise’s institutional processes to form a well-arranged hazardous waste safety management and control system.
IV. Acceptance of Enterprise Compliance Governance
During the governance, in addition to improving the management of hazardous waste, Company S also rearranged wastewater and exhaust gas treatment equipment, normalized environmental acceptance monitoring and evaluation, and set up a full-process monitoring system. Since the subject incident, no environmental pollution incidents had occurred again. At the end of April 2022, Company S successfully passed the evaluation and acceptance check by the third-party supervision and evaluation agency.
In mid May 2022, the procuratorate held a public hearing, which unanimously agreed that Company S had taken effective measures including establishing sound risk control systems, carrying out practical targeted environmental protection governance, and improving regulatory models, among others, to give effect to production and operation compliance. The enterprise compliance results of Company S were accordingly accepted in the hearing.
V. Criminal Case Handling Outcome
Given that Company S was in moderate criminal offense, voluntarily pleaded guilty to punishment, and established an effective compliance management system, the procuratorate made a non-prosecution decision to it in accordance with the law.
