China raids multiple offices of international consultancy Capvision

China on Monday said state security services had raided multiple offices of international consultancy Capvision, accusing advisory groups in the country of ignoring national security risks and passing on sensitive information abroad.

Authorities questioned employees and inspected Capvision’s offices in Shanghai, Beijing, Suzhou and Shenzhen as part of a campaign to clean up the consulting industry in the world’s second-largest economy, state media said.

Chinese media reported that consulting groups had tapped personnel in “our party and government organs and other clandestine units” to provide sensitive information to clients abroad.

The raids on Capvision offices were the latest Chinese actions against consulting groups carrying out due diligence and other corporate advisory work in the country, often at the behest of international investors and multinationals.

Police raided the Beijing office of US due diligence group Mintz in March, detaining five employees. Authorities weeks later questioned employees and hauled away materials at the Shanghai premises of Bain & Company, the blue-chip US consultancy.

While there had been previous reports of problems at Capvision, the primetime coverage by state media outlets on Monday marked the first time Chinese authorities acknowledged the scale of the actions against the company and the wider crackdown on the industry.

An in-depth report aired Monday evening by state broadcaster CCTV said foreign groups were turning to consulting groups in China to glean sensitive information on the country, while a separate state media report said authorities would step up supervision to “guide the sector’s healthy development” .

The CCTV report focused primarily on Capvision, accusing the consulting group of setting up interviews with prominent experts in areas such as government policy, national defense and technology, and said a few had revealed sensitive and secret information during the consultations.

While such conversations may be considered less sensitive elsewhere, Chinese authorities have clamped down on passing any data abroad and increasingly view corporate due diligence in a sinister light.

The spate of actions against consulting groups has caused growing fear in the international business community.

The US Chamber of Commerce last month warned that Chinese scrutiny of US companies had risen “dramatically”, particularly in the wake of a counter-espionage law that appeared to have broadened the scope of the kind of documents and data that could be deemed sensitive for National security reasons.

Video footage aired during China’s main state-run primetime broadcast on Monday showed police cars descending on an office park and teams of officers interrogating Capvision employees and photographing everything from servers to hard drives.

Capvision, with headquarters in New York and Shanghai, specializes in connecting international investors and management consultants such as those from Bain and McKinsey with subject specialists from its network of 450,000 experts.

The group has developed into one of the largest China-focused expert networks since its founding in 2006, with more than 500 of its 700 employees based in the mainland, according to public records.

Capvision did not immediately respond to a request for comment, although it did take to Chinese social media to say it would “resolutely implement the development of national security” and pledged to lead a clean-up of the industry.