CICC Capital bans Capvision Partners as Beijing clamps down on consultancies

CICC Capital, a division under the CICC investment bank in China, has suspended the use of services offered by Capvision Partners. These services were suspended after an investigation into the network as Beijing cracks down on national security.

CICC Capital bans Capvision Partners

Capvision has been the latest target of China’s investigations on sensitive corporate information. The CICC Capital research division has now said that it will ban all its teams from using the services offered by Capvision because of due-diligence-related expert calls and inquiries.

The decision comes as participants in China’s financial sector become eager to understand Beijing’s actions to increase scrutiny of consultancies and their clients.

The concerns by the regulator have also been triggered by a decision by Chinese lawmakers to pass updates to an anti-espionage bill in April. The legislation bans the transfer of any information concerning national security and expand the definition of spying.

CICC Capital’s ban on Capvision will be effected immediately, with the firm saying that the team will review the previous deals made by the consultancy firm. The investment teams at CICC Capital have also been banned from using Capvision to make expert calls and inquiries. CICC Capital can hire other consulting firms for these practices.

Beijing is tightening the security laws

Capvision offices were raided by Chinese law enforcement this week. The company has offices in eight cities globally. State broadcaster CCTV said that the consultancy firm accepted projects from offshore companies to gather information about “state secrets and intelligence.”

Capvision is not the only consultancy firm targeted by Chinese law enforcement. The Beijing office of the Mintz corporate due diligence company was also targeted as China inches closer to enacting an anti-espionage law from July 1, which will target more companies.

Due diligence firms are essential to companies offering businesses in China. Many firms operating in the country rely on subcontractors for due diligence. The investigations conducted in Beijing have affected the business community, forcing many of them to consider restructuring.

CICC Capital is not the only firm that has suspended the services offered by Capvision. An Asian fund based in Hong Kong has also halted all deals with Capvision after the report by CCTV. The company has also informed staff previously using its services to monitor their records.

Another hedge fund based in Hong Kong has also said that the compliance team has ordered them to temporarily halt deals with Capvision following the report by CCTV. Capvision also released a statement after the CCTV report saying that it would comply with the national security rules in China and take measures to ensure it achieves compliance.

China has maintained that it still welcomes foreign investment in the country. However, it has been said that the companies investing in the country needed to comply with the laws, including meeting the requirements under the espionage legislation that will be passed in two months.