The Role Of Court Investigation Orders In Employee Corruption Cases

In labor dispute arbitration or litigation in China, court orders for discovery are a crucial means of obtaining key evidence, particularly in cases involving employee misconduct or unlawful termination of employment. In recent years, we have frequently encountered investigations of employee misconduct such as commercial bribery and embezzlement. These cases often lead to labor dispute. Due to the clandestine nature of such misconduct, companies often struggle to independently obtain critical evidence of these violations, for instance relevant bank transfer records. Under current Chinese judicial practice, the lack of such evidence places companies at a significant disadvantage, whether in pursuing criminal complaints, civil claims, or employment termination.

In such investigations, we typically uncover critical evidence through employees' email correspondence, clues provided by colleagues, or records obtained from suppliers and customers. For instance, we have successfully gathered witness testimonies or transaction records from suppliers to prove bribery solicitation by employees. We have also handled cases where an employee used the company's email account to forge customer orders and sold the high-demand products to their own privately held companies– a fraudulent practice commonly referred to as “order diversion fraud”. Furthermore, we have addressed instances of collusion among employees within the same department, who manipulated price differences through agents to profit unlawfully. Our experience shows that when companies secure key evidence, such as transfer records or proof of bribery demands, employees often do not dispute their misconduct or illegal acts and are generally willing to compensate the company for its losses. In these scenarios, we have successfully assisted the companies in lawfully terminating implicated employees, managing relationships with involved third parties (such as non-compliant suppliers or agents), and securing substantial compensation from the wrongdoers.

However, if the company lacks conclusive evidence, or where the available evidence leaves room for dispute, employees often deny wrongdoing and may even file claims for financial compensation following termination. From the employer’s perspective, the risk of being ordered to pay significant compensation remains, despite strong grounds to suspect serious misconduct or illegal act, which poses a significant management challenge.

Given the clandestine nature of such employee misconduct and the practical challenges in obtaining evidence, we have to seek assistance from Chinese judicial authorities. One particularly effective measure is obtaining a court-issued investigation order to examine the bank transaction records of the employees involved. Current judicial practice requires that a formal case must be duly filed and the applicant must demonstrate the necessity of investigating the employee’s financial transactions. The scope of such investigation order typically includes information of all bank accounts under the employee's name, such as the information of the bank, bank account details, and detailed transaction records. Implementation varies by financial institution: certain banks will only disclose such information to the court, while others may permit two qualified lawyers, bearing the court-issued investigation order, to jointly retrieve the specified records. Accordingly, it is essential to maintain close coordination with the court to ensure timely access to such bank transaction records. From the bank transaction records, we can further analyze the relevant connections. Where particular transactions raise suspicions, we may petition for additional investigation to secure further evidence, which helps gain more time for the case and improves the chances of a favorable outcome. This evidence often plays a decisive role in labor dispute arbitration, helping employers take the initiative in disputes involving unlawful or disciplinary terminations.

In addition, it is worth nothing that an employee’s bank account details are classified as sensitive personal information and fall within the scope of protection under the Personal Information Protection Law. Particular care must be taken to screen and evaluate the relevance of such bank account information before submitting an investigation order, in order to avoid infringing upon employees' personal information rights and thereby mitigating the risk of additional litigation.

In summary, a court-issued investigation order can serve as an effective way for obtaining strong evidence for labor dispute and discovering clues related to employees' covert misconduct. If critical evidence is discovered, it may even provide basis for pursuing criminal liabilities against the implicated employee. Throughout the evidence-gathering process, particular care must be taken to safeguard employee privacy, thereby mitigating the risk of potential disputes. When handling cases involving the termination of employment relationships due to disciplinary violations, employers should fully exercise the investigative rights granted by law to address the challenges posed by complex labor dispute arbitration proceedings.

Author: Qin Anqi

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