China tightens screws on consulting firms under anti-spy crackdown, raids Capvision offices

Chinese authorities carried out a nationwide crackdown on consulting firms engaging in alleged espionage activities as Beijing tightens grip on foreign access to sensitive information.

Chinese media reports named only one firm where the raids were carried out across various cities—Capvision.

Media reports stated that Chinese enforcement agencies carried out synchronized operations in Capvision branches in cities like Beijing, Shanghai, Shenzhen and Suzhou. The employees were questioned and office items were examined. It is unclear when the raids took place.

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Capvision was set up in 2008 by ex-Bain consultants and Morgan Stanley bankers. It offers consultation services to more than 2000 clients and has headquarters in Shanghai and New York, according to its website.

The company has been accused of failing to "seriously fulfill its counterintelligence responsibilities and obligations to prevent espionage", Chinese state broadcaster Jiangsu Television said on Monday.

An unnamed police officer told the broadcaster that Capvision routinely hired "highly-paid consulting experts" with close ties to Chinese authorities to "illegally obtain various types of sensitive data", which he said posed "major risks to China's national security".

Responding to the allegations, the firm wrote on its WeChat account that it would be "resolute" in fulfilling its national security responsibilities. It would also take on a "leading role" in regulating the consulting industry, it said, according to BBC.

The development comes a week after the Chinese police raided the Shanghai offices of US consultancy giant Bain & Company. Officers seized their computers and phones, according to the Financial Times, which cited people briefed on the matter.

And in March, Chinese authorities detained five local staff at Mintz Group and shuttered its Beijing office.

The Chinese foreign ministry had accused New York-based due diligence firm Mintz Group, which specialises in background checks, fact gathering and internal investigations, “of illegal operations".

The latest clampdown on the consultancy firms stems from an anti-espionage law that was implemented last month that expanded the definition of "spying" and included cyberattacks against state bodies or critical information infrastructure.

The revised law, which will take effect from July 1, also gives Chinese authorities more teeth to forcibly search the belongings or request data of individuals suspected of spying.

Under this law, Chinese authorities can also ban citizens suspected of spying from leaving the country, or foreign nationals from entering.

(With inputs from agencies)

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