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China fines Mintz $1.5 million for 'unapproved' work, after raiding its Beijing office

FILE PHOTO: The U.S. corporate due diligence firm Mintz Group's office is seen in Hong Kong

By Yew Lun Tian

BEIJING (Reuters) - China fined U.S. firm Mintz Group about $1.5 million for doing "unapproved statistical work", said a Beijing Municipal Bureau of Statistics notice, after a raid of its Beijing office sparked worries about China's openness to foreign investment.

The Beijing's Bureau of Statistics said in a ruling dated July 5, first reported by the Wall Street Journal, that the firm had carried out "foreign-related statistical investigations" without seeking and obtaining approvals.

In a further notice on its website dated July 14, the bureau said Mintz conducted 37 such investigations from March 2019 to July 2022.

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As punishment, the bureau confiscated 5.34 million yuan of the firm's "illegal proceeds" and imposed an administrative penalty of an equivalent amount, resulting in a total fine of about $1.5 million.

Mintz has 60 days to file an appeal and six months to file an administrative suit. It did not respond to a request for comment.

The firm has previously said it is licensed to conduct legitimate business in China and that it has always operated lawfully.

As per Mintz's website, its services include background checks on potential business partners and new hires, fact gathering for law suits and internal investigations.

Chinese authorities raided Mintz's Beijing office in March and detained all five local staff, in what turned out to be the beginning of a sweeping crackdown on consultancy and due diligence firms, including Bain & Company's office in Shanghai and Capvision Partners.

Foreign business lobbies said the crackdown damages investor confidence in the world's second-largest economy.

Even as China reopens for business with the world this year after casting off pandemic controls that effectively shut its borders, it has gotten more suspicious of its engagement with the West, in line with a call by President Xi Jinping to place national security over everything.

Beijing updated an anti-espionage law in July that broadened the definition of spying and banned the transfer of information related to national security.

In recent years, China had amended a host of laws to restrict foreign access to its data, such as requiring data to be stored in Chinese servers and requiring companies with users' data to undergo security review before listing shares overseas.

(Reporting by Yew Lun Tian; Additional reporting by James Pomfret in Hong Kong; Editing by Michael Perry)