Written by: Liu Zhengyao
Introduction
Embezzlement Crime—The Era of Frequent Commercial Crimes Has Arrived
In recent years, with the continuous development of the private economy in our country, issues of internal governance in enterprises have become increasingly prominent. Embezzlement crime—an act of illegal appropriation of property by staff using their position for personal gain—has become one of the most prevalent types of economic crime in China, consistently ranking among the top in commercial criminal cases nationwide.
From a legislative perspective, the state has indeed been strengthening its crackdown on embezzlement crimes. The Criminal Law Amendment (XI), effective from March 1, 2021, comprehensively upgraded the sentencing norms for embezzlement crimes: it introduced a new sentencing category for "particularly large amounts," raised the statutory maximum penalty, and added penalties for fines, sending a strong signal of stricter punishment for internal corruption within enterprises. In April 2022, the "Provisions on the Standards for Filing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Organs (II)" significantly lowered the filing threshold from 60,000 yuan to 30,000 yuan, bringing more embezzlement behaviors under the purview of criminal law.
From a judicial perspective, in May 2022, the Supreme People's Procuratorate specifically released "Typical Cases of Handling Embezzlement Crimes in Private Enterprises According to Law," clearly signaling a judicial direction of "harshly cracking down on corruption crimes in private enterprises."
In reality, many private enterprises in our country have irregular management practices, unclear property ownership, and loose auditing and supervision, heavily characterized by personalization and familial ties. When internal conflicts arise among shareholders or interests clash among executives, embezzlement behaviors quietly begin to sprout. For instance, financial staff may fabricate expenses to extract funds, sales staff may withhold company receivables, and shareholders may exploit their control to transfer company assets, even technical personnel may tamper with system data to appropriate profits, with embezzlement methods becoming increasingly diverse and covert.
As a result, criminal accusations and defenses related to embezzlement crimes have increasingly attracted widespread attention from all sectors of society in recent years. For victimized enterprises, how to effectively protect their rights and recover losses through criminal accusations; for involved parties, how to legally protect their rights amidst complex cases, has become a significant and pressing issue requiring solutions in practice.
01 Establishing Evidence and Subject Qualification for Accusations
An effective criminal accusation must be based on an accurate understanding of China's criminal legal standards.
(1) Three Basic Elements for Establishing an Accusation
Firstly, the perpetrator must be a qualified subject; the accused must be personnel from a company, enterprise, or other units (excluding state personnel);
Secondly, the use of position-related convenience; the accused must utilize their power from their position that allows them to manage or handle the unit's property to commit embezzlement;
Thirdly, the amount must meet the standard for filing a prosecution; currently, the nationwide standard is 30,000 yuan or higher (though some provinces may still refer to the old standard of 60,000 yuan in practice).
All three elements are indispensable, and the economic investigation department of public security will review the accusation materials accordingly.
(2) Determining the Qualifications of the Accuser
The victim of embezzlement crimes is the unit, and the accuser is usually the legal representative of the unit, or other authorized directors, supervisors, managers, etc. Practically, lawyers commissioned by the unit can also file accusations. When the actual controller or legal representative of the company is also the perpetrator of the embezzlement, or when shareholder disputes prevent the company’s intentions from being expressed, all or some shareholders of the company can also file accusations directly; public security generally accepts such accusations (the key is to prove that a criminal fact has occurred).
(3) Proving the Qualifications of the Accused
The "unit staff" identity of the accused needs to be proved through evidence such as labor contracts, appointment and dismissal documents, salary payment details, social security payment vouchers, attendance records, etc., covering the period during which the alleged criminal behavior occurred.
If due to irregular enterprise management some evidence is missing, written explanations should be provided and testimonials from informed personnel (such as relevant colleagues) should be collected. It should be particularly noted that if personnel in state-owned units commit similar actions, they should be prosecuted for embezzlement and cannot be accused of embezzlement; identification should be conducted before reporting.
(4) Preparation of Core Evidence Materials
When filing an accusation with the public security, one should systematically organize the following eight types of materials:
Report/Accusation Letter;
Proof of identity of the accusing unit (business license, company articles, etc.);
Identification materials of the accused;
Evidence proving the accused has "position-related convenience" (assignment document, power of attorney, internal approval documents, etc.);
Direct evidence proving the embezzlement act (funds flow, financial statements, invoices, contracts, accounting vouchers, etc.);
Evidence proving that the embezzled property belongs to the unit;
Evidence to determine the amount of crime—For cases with complex facts and larger amounts, it is recommended to commission an independent third party to issue a judicial accounting appraisal report or financial audit report to significantly improve the probability of filing a case;
Other auxiliary evidence, such as surveillance videos, chat records, emails, and other electronic data.
(5) Jurisdiction and Procedural Key Points of the Accusation
Embezzlement crimes are under the jurisdiction of the economic investigation department of public security, with jurisdiction including the location of the accused's workplace (generally the actual operating place rather than the registered place), the location where the crime was committed, and the residence of the accused. In practice, it is recommended to report to the economic investigation department where the accused works, or to initially report to the local police station, which will transfer the case to economic investigations. After accepting the case, economic investigations generally extend the case filing review period to 30 to 60 days; the accuser should closely monitor the progress and actively cooperate to supplement evidence materials. If public security does not file a case, multiple remedy routes can be taken, such as applying for reconsideration, requesting higher public security organs for review, asking the procuratorate for case oversight, or even directly filing a self-accusation in court.
02 Disputed Focus in Accusation Practices: In-Depth Analysis of Six Major Difficult Issues
The legal provisions for embezzlement crimes are not complex, but it is known that in the ever-changing commercial practice, the accusation process often gives rise to a multitude of controversial issues. The following six major difficulties are the most frequent core disputes that can easily lead to accusation failures in practice.
(1) Can Shareholders Be Accused in Embezzlement Crimes?
This is the primary conflict in shareholder dispute cases. Theoretically, the identity of a shareholder does not equate to having a position; there is no position-related convenience. However, individuals with only shareholder status who actually control the daily operations of the company may still be recognized as having position-related convenience in judicial practice, thus constituting the subject of embezzlement crime. However, when shareholders initiate accusations, the amount of crime must be calculated based on comprehensive and detailed accounts of financial transactions, which often requires commissioning a third party to issue an audit report. This presents the greatest evidentiary challenge for such accusations. It is also noteworthy that if the company has always operated based on a partnership of individuals, with blurred lines between personalities and the company, it becomes challenging for shareholders to invoke this crime against each other.
(2) How to Accurately Determine the Amount of Crime?
The crime amount refers to the direct loss caused to the company by the perpetrator, not the actual profits made by the perpetrator. If the object of embezzlement is a physical item, the market value or production cost of that item at the time of the crime should apply, which typically requires a price evaluation agency to issue an appraisal opinion. Additionally, the claimed loss must represent a loss for which the company has a "reasonable expectation"; benefits lacking reasonable expectations cannot be included in the crime amount—for example, in cases where the accused employee profits from opportunities belonging to the victim company, it must be analyzed whether that business opportunity necessarily belongs to the victim company and whether it would invariably yield reasonable, expected direct economic benefits to the victim company.
(3) How to Determine the Connection between "Position-Related Convenience" and Criminal Behavior?
In judicial practice, distinguishing whether "position-related convenience" was utilized is key to differentiating embezzlement crimes from theft and fraud crimes.
It is believed that merely utilizing work-related conveniences (such as familiarity with the environment or access to specific locations), without the authority itself, does not constitute position-related convenience for this crime.
An especially complex scenario in practice is the issue of whether employees have the authority to act, such as when employees collect funds owed to the company without authorization; whether this constitutes embezzlement crime hinges on whether it forms apparent agency. If it constitutes apparent agency, the actual harmed party is the company, and the employee may still establish a triangular fraud-like embezzlement; if it does not form apparent agency, the harmed party becomes a third party, thereby potentially placing the employee in the realm of ordinary fraud.
Nevertheless, whether it constitutes apparent agency belongs to civil judgments, and the handling by public security organs can vary (even from the perspective of the defense, public security may lack the authority to conclude whether apparent agency exists), which makes it a core difficulty in such accusations.
(4) The Distinction and Competition between Embezzlement Crimes and Similar Offenses
The core difference between embezzlement crimes and theft crimes lies in whether position-related convenience was utilized and whether the perpetrator had legitimate possession of the property based on their position before the crime. These two constructs correspond legally, adhering to the principle of special law over general law, for those who steal unit property using their position should be classified as embezzlement crimes;
The distinction from embezzlement crimes mainly depends on whether the subject is a state worker and whether they are engaged in public duties;
Distinguishing from the crime of misappropriation of funds primarily rests on the subjective intention of whether the perpetrator possesses the goal of illegal permanent possession. In cases involving village officials or managers of state-controlled enterprises, the boundaries of the crimes become particularly obscure and necessitate holistic judgment.
(5) The Difficulty of Proving Subjective "Knowledge" and Illegal Possession Intent
Embezzlement crimes require the perpetrator to have the intent "to illegally possess property of the unit"; defendants typically do not voluntarily admit this, complicating proof. Judicial authorities usually infer subjective intent through objective actions, for example: if a perpetrator knows they are dealing with company property yet employs means of embezzlement, theft, or deception; or if through concealing, altering, or fabricating financial documents, the property is claimed as personal; or if finance staff embezzle funds but then falsify accounts to cover it up; or if embezzled funds are used in illegal activities leading to their inability to return. The accuser, when preparing report materials, should systematically gather objective evidence around these dimensions to effectively support the identification of subjective intent.
(6) Comprehensive Use of Filing Obstacles and Remedy Paths
Cases involving shareholder disputes, smaller amounts, or preliminary insufficient evidence are often not accepted or filed by public security on the grounds of being "economic disputes" or "insufficient evidence."
In response, the accuser should establish a diverse remedy thinking: during the reporting phase, prioritize the most substantiated evidence of the embezzlement facts, following a strategy of "file first, supplement later"; once filing is denied, promptly apply for reconsideration and review, and timely request the procuratorate for case oversight; if necessary, consider strategic adjustments like changing jurisdiction, altering accusation facts or charges; after exhausting all avenues, one may file a criminal self-accusation in court as a last resort.
If the case involves compensation negotiations, it is inadvisable to issue a letter of understanding before fully receiving compensation; if agreeing to installment payments, it should be clearly stated in the agreement that non-complete payment means the withdrawal of the understanding.
03 Conclusion
Criminal accusations of embezzlement are far from merely submitting a set of materials to public security. From comprehensive evidence collection and systematic organization to accurate analysis of complex legal relationships; from pre-reporting strategy planning to full tracking and promotion after filing, every link tests the lawyer's professional capability and practical experience.
The author has been deeply involved in the field of criminal law for many years, accumulating rich practical experience in criminal accusations and defenses against corporate commercial crimes, in addition to providing legal services related to Web3. Successfully processing numerous embezzlement cases that originally faced filing difficulties to acceptance and filing has effectively assisted victimized enterprises in recovering losses; regarding defense work, Lawyer Liu also has several classic cases of successful defense in embezzlement crimes, achieving favorable outcomes such as non-prosecution, reduced punishment, or lenient penalties through various defense strategies, including negating the existence of position-related convenience, challenging the determination of crime amounts, and demonstrating the absence of subjective intent for illegal possession.
The healthy development of enterprises relies on a strong deterrent against internal corruption, and the legitimate rights and interests of involved parties require professional and responsible legal support. If your enterprise is facing issues related to embezzlement, misappropriation of funds, or other commercial crimes, or if you are personally involved in related criminal cases, you are welcome to consult the author of this article for professional, timely, and effective legal support.
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