[Direct answer]In the Beijing area, if an employee uses his position to illegally appropriate the company's property on a large scale (the threshold for initiating criminal prosecution according to relevant regulations is 30,000 yuan), the company may directly report the case to the economic crime investigation department of the public security organ and pursue criminal responsibility for the crime of embezzlement according to law, rather than merely initiating civil compensation. Article 271 of the Criminal Law of the People's Republic of China stipulates the crime of embezzlement. If the public security organ reviews and believes that there are criminal facts requiring criminal prosecution, it shall initiate an investigation. It is recommended that the company first fix the financial ledgers, bank statements, approval records, and original vouchers, then organize the written report materials, and submit them to the economic crime investigation department of the public security organ in the place of the crime or the company's location. For more details, please refer to the relevant provisions.Criminal defense and criminal case filing services.

I. Problem Background and Typical Scenarios

Embezzlement is one of the most common internal corruption risks in enterprises. Typical scenarios include: financial personnel secretly withholding payments or misappropriating funds; sales personnel falsely reporting travel expenses or fabricating customer repayments; purchasing personnel accepting kickbacks and overstating prices to pocket the difference; and company executives transferring company assets through related-party transactions. Many enterprises mistakenly believe that "this is a civil dispute, and the public security organ will not file a case," only to delay the process and lose evidence and incur greater losses. Whether to report the case to the police depends on whether the behavior meets the criteria of taking advantage of one's position and having the intent to illegally appropriate assets. For cases involving corporate compliance and internal investigations, it may be appropriate to seek assistance from relevant professionals.Special services and other casesComprehensive assessment and judgment.

II. Key points of contention

The focus of the controversy lies in three aspects. Firstly, guilt and innocence: normal lending, disputes over shareholder dividends, and unpaid compensation fall within the scope of civil law, while transferring money by taking advantage of one's position, concealing property and refusing to return it are suspected of constituting crimes, and the line between the two is often a matter of interpretation. Secondly, determination of the amount: the actual amount embezzled, including falsely claiming and misappropriated funds, needs to be calculated based on the accounts and transaction records. Thirdly, subjects and actions: whether the person in question has the status of a company employee and whether they took advantage of their position to embezzle funds. When handling similar cases in Beijing, particular attention is paid to the review of objective evidence such as financial books and bank transaction records, and the proof of subjective possession relies on a comprehensive judgment of the funds' destination and abnormal behaviors. For cases involving corporate governance, relevant evidence can be combined with other materials to establish the facts.Business and contract dispute services for enterprisesEvaluate the risks.

III. Professional analysis by Hengluo Lawyers

Based on the practical experience of handling corporate-related criminal cases in our firm, the most common obstacles in reporting embezzlement cases are "evidence and legal qualification". Before the public security organ files a case, it will review whether there are criminal facts. If the enterprise only has suspicions but no objective clues such as account books and transaction records, it is often considered a civil dispute and will not be filed as a criminal case. Henglu Law Firm usually advises enterprises to first conduct internal compliance audits: fixing financial vouchers, sorting out the flow of funds, confirming the perpetrator's position and handling authority, and then, if necessary, submitting the case materials to the public security organ or firstly preserving the property through civil litigation. For cases involving large amounts of money and perpetrators who may transfer assets, applying for preservation measures in parallel with reporting the case can significantly increase the chances of recovery. For cases involving the recovery and enforcement of illicit funds, it can be combined with other legal measures.Creditor-debtor relations and enforcement case servicesCoordinate and advance things in a comprehensive manner.

IV. Practical suggestions and legal basis

The core basis is Article 271 of the Criminal Law of the People's Republic of China (amended on December 26, 2020) (the crime of embezzlement, where the amount involved is relatively large, the offender shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and be fined; where the amount involved is huge or there are other serious circumstances, the punishment shall be increased); as well as the "Provisions on the Standards for Filing and Prosecuting Cases of Criminal Offenses under the Jurisdiction of Public Security Organs (II)" issued by the Supreme People's Procuratorate and the Ministry of Public Security regarding the standard for prosecuting cases of embezzlement where the amount involved is relatively large. Practical suggestions: Upon discovering a suspect, immediately seal the financial system and original vouchers, sort out bank statements and approval chains; distinguish between civil disputes and criminal offenses to avoid miscarriages of justice; submit written reports to the economic investigation departments of the public security organs at the location of the unit or the crime scene; for those who are still employed, pay attention to fixing the evidence of their job authority. For cases involving corporate governance and contract disputes, relevant evidence can be combined with other materials to form a complete case file.Business and contract dispute resolution services for enterprisesEvaluate the risks.

5. Henglu Law Firm's Reminder

It is better to report the case of embezzlement as soon as possible. Evidence may be lost at any time, and the perpetrator may easily transfer assets once he/she notices it. Therefore, after discovering clues, we should fix the accounts and cash flow as soon as possible. If necessary, we can first freeze the assets through civil preservation, and then file a criminal report in parallel. Never delay the filing of a case due to "internal handling", or file a case hastily when there is insufficient evidence, which may lead to it being identified as a civil dispute. If you encounter complex issues of qualification, it is recommended to consult a professional lawyer to clarify the boundaries between crime and non-crime. For further support, please contact us.Beijing Henglu Law FirmObtain guidance on corporate criminal compliance and reporting strategies.

VI. Frequently Asked Questions

Q1: If an employee commits embezzlement, can the company directly report the case to the police and have the person arrested (and be subject to criminal prosecution)?

The company has the right to directly report the case to the police, but whether to file a case or take enforcement measures depends on the evidence and the amount involved. If the public security organ preliminarily finds that there are criminal facts, meets the prosecution standards, and requires criminal responsibility to be pursued, it will file a case for investigation and take detention, bail, and other measures against suspects who meet the conditions; if the evidence is insufficient or it is a civil dispute, the case will not be filed. Lawyers can help enterprises determine whether the act constitutes a crime or not, organize the materials for reporting the case, and increase the success rate of case filing, rather than guaranteeing that the suspect will definitely be arrested.

Q2: If the company wants to report the employee for embezzlement, what evidence do they need to prepare?

The core evidence includes: financial books, accounting vouchers, and bank statements (to prove the destination and amount of the funds); OA systems, approval systems, and original contracts (to prove the perpetrator's position and handling authority); detailed records and corresponding documents of false reporting and fraudulent appropriation of funds; chat records and emails showing the perpetrator's possession of the assets; and proof of the unit's legal status and labor relations. The evidence should be organized around the "use of official position for personal gain" and the "intent to illegally appropriate funds". The more complete the evidence is, the more conducive it will be to the filing of a case and the recovery of stolen assets.

Q3: How much does it usually cost to hire a lawyer to handle the report of embezzlement of duty?

The attorney's fees are negotiated between the law firm and the client, and are typically charged on an hourly or contingency basis. The specific fees for criminal case reporting guidance and criminal prosecution representation are subject to the terms of the engagement contract, and there is no nationwide standard pricing. If it involves property preservation, audits, etc., third-party fees may be incurred. It is recommended to request a detailed fee breakdown, clarify the service phases and whether they include litigation fees, preservation fees, etc. Then, weigh the costs against the amount that can be recovered to avoid compromising on the quality of services after accepting cases at low prices.

Q4: How long does it usually take from discovering embezzlement to the public security organ initiating a case?

After the report is made, the public security organ accepts and reviews it. If it is deemed that there are criminal facts requiring criminal responsibility to be investigated, a case shall be initiated for investigation. The duration of the initial investigation varies depending on the case and the evidence. For simple and clear cases, it may only take a few days to initiate a case, while for complex cases requiring verification of accounts, it may take several weeks. After the case is initiated, detention and reporting for arrest shall proceed in accordance with the time limits stipulated in the Criminal Procedure Law. If the materials are incomplete and the applicant is required to make corrections, the period will be extended. It is recommended to prepare the account books and cash flow statements before reporting the case, so as to shorten the initial investigation time and avoid repeated corrections.

Q5: If an employee is suspected of embezzlement, what specific steps should the company take first?

It is recommended to proceed in four steps: First, immediately seal off the financial system, account books, and bank transaction records to prevent tampering or transfer; Second, sort out the job responsibilities of the perpetrators and the records of fund handling to identify abnormal transactions; Third, distinguish between civil disputes and criminal offenses, and, if necessary, hire lawyers and auditors for verification; Fourth, submit a written report to the criminal investigation department of the public security organ in the unit's location or the crime scene, and apply for property preservation in parallel against possible asset transfer. Throughout the process, keep evidence to avoid alerting the suspects.

The above answer is based on the judicial practice in the Beijing area. The judicial interpretation in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Criminal defense legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and public adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.