China grants immunity to corporate executives to boost the economy – Executives suspected of fraud or assault will not be prosecuted

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Solid paywall but if I may comment on just the title…this is not how you advance economic activity. Fraud and uncertainty are drags on an economic system, not the other way around. If you look around the world one of the most reliable predictors of economic success is robust enforcement of laws and contracts.

Objective_Stage

> Chinese prosecutors are dropping criminal charges against business owners in a desperate effort to rescue the country’s ailing private sector. > The decision to offer private sector executives immunity from punishment for criminal activities, including assault, hints at the extent to which Beijing is prepared to go to help companies grappling with one of the country’s worst debt crises. > In the past decade, there have been a record number of bond defaults while economic growth fell to a 30-year low in the third quarter of this year. > Chinese prosecutors have abandoned 8,565 cases while 10,973 lawbreaking private company workers, mostly business owners, have been spared jail in the first nine months of this year, according to the Supreme People’s Procuratorate, a government agency responsible for investigating and prosecuting crimes. That is a year-on-year rise of 42 per cent and 24 per cent respectively. > A variety of cases, ranging from causing personal injury to invoice fraud, have been dropped despite evidence that the suspects violated the law. > “We should refrain from making arrests or prosecutions or giving harsh sentences whenever possible, because arresting or prosecuting business owners will immediately cause their firms to go under and dozens or hundreds of workers to lose their jobs,” said Zhang Jun, procurator-general of the Supreme People’s Procuratorate, in a televised speech last month. > Some officials went even further. “Simply following the letters of the law will lead to a misunderstanding of the spirit of lawmaking” and will not incorporate “party and national policy into law enforcement”, said Jia Yu, procurator-general of Zhejiang Province in an interview with local media this week. > The growing use of immunity, however, has raised worries that private companies have been given the green light to win business contracts illegally. > Margaret Lewis, a law professor at Seton Hall University in New Jersey, said the Chinese government was “putting the economy above the precise and strict implementation of the law”. > “It is giving a message to companies that you are welcome to be a little bit more aggressive and perhaps do things that are technically violating the law.” > China’s private businesses face more legal risks than state-owned or foreign companies. A study by Beijing Normal University this year showed that between 2014 and 2018, eight out of nine convicted corporate executives worked for private businesses. > Their plight became particularly worrying this year with private companies, the main employers and taxpayers in China, struggling with a surge in defaults. > A record 4.9 per cent of China’s private bond issuers reneged on payments in the first 11 months of this year, an increase from 0.6 per cent in 2014, according to Fitch Ratings. > Yang Hehong, owner of a rye grass seed company in the eastern city of Yancheng, is one executive who benefited from more lenient enforcement. Last year, prosecutors decided not to pursue a charge against him for falsifying documents to win a Rmb3.9m ($555,000) government subsidy. > The subsidy has helped Mr Yang’s company flourish and this year he expects to corner four-fifths of the national market. > “I almost collapsed when the police began investigating me,” said Mr Yang, “I got away with punishment because I only made a small mistake.” > A local prosecutor said they dropped the charge because Mr Yang had made good use of the state subsidy. “It is true that he has made up some facts,” said the prosecutor. “But the project is completed and is having a positive impact.”

FFSNIG

This is literally the least Communist headline I have ever read

samrequireham

Make money for the mob and you’re protected. Just don’t be late with the kickbacks.

futatorius

Amazing that the Chinese government feels they belong in a the rules based global system and yet pull things like this.

Coolioissomething