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China fines US due diligence firm Mintz Group $1.5 million for ‘unapproved’ investigations

By Laura He, CNN

Hong Kong (CNN) — China has fined Mintz Group, an American corporate due diligence firm, about $1.5 million for allegedly conducting unapproved statistical work in the country, as it continues with a nationwide crackdown on consulting firms in the name of national security.

The fine came to light months after authorities closed the firm’s Beijing office in March and detained five of its local employees.

Mintz’s Beijing office had carried out “foreign-related statistical investigations” without seeking and obtaining approvals, which violated two Chinese regulations, the Beijing Municipal Bureau of Statistics said in a statement on its website dated July 14.

CNN was made aware of the notice this week. The news was previously reported by The Wall Street Journal.

A notice dated July 5 attached to the statement said the unauthorized activities took place over 37 projects from March 2019 to July 2022.

The authorities imposed a fine totaling 10.69 million yuan ($1.49 million) on the company and ordered it to stop conducting such investigations in the country.

Mintz didn’t immediately respond to a request by CNN for comment.

In March, after its office was raided, Mintz told CNN that it had not received any official legal notice regarding a case against the company and had requested that authorities release its employees.

Days after the raid occurred, a spokesperson for the Chinese foreign ministry said Mintz was suspected of “illegal business operations.”

Since then, Chinese regulators launched a broader crackdown on consulting firms.

In April, police questioned staff at the Shanghai offices of global consulting giant Bain & Company. A few weeks later, state media released details of multiple raids on the offices of Capvision, an international expert network firm with headquarters in Shanghai and New York, by state security forces.

Officials have cited national security in their investigation of Capvision, and accused the company of helping to leak sensitive military information to foreign forces, according to state media. The authorities also said it would increase scrutiny over the consultancy industry for espionage-related activities.

The tightened regulatory scrutiny over foreign access to sensitive information comes amid growing tensions with the United States.

Washington has ramped up sanctions against key Chinese industries, including chipmaking. Beijing has also displayed growing distrust of foreign companies, even as multiple senior officials have sought to roll out the red carpet for them to invest in China amid an economic slowdown.

In late April, Beijing tightened its counter-espionage law and expanded the list of activities that could be considered spying, increasing the risks for international firms.

It has also restricted overseas access to some Chinese data sources, such as Wind, a database that provides key financial data.

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