Dacheng Attorneys Advise China General Nuclear Power Group on Internal Control System Building

A Dacheng team led by attorney Yan Liping, vice director of the SOE practice of the Beijing office, acting as special legal adviser for China General Nuclear Power Group, recently worked with  a well-known international consulting firm  on building an internal control system for the group.
 
China General Nuclear Power Group (“CGN”), a state-owned, parent-subsidiary-type conglomerate that grows along with the development of China’s reform and opening up and the cause of nuclear power, is comprised of China General Nuclear Power Group Co., Ltd. and more than 30 subsidiaries. On the basis of the well-established Daya Bay Nuclear Power Station, CGN has set up a state-of-the-art, specialized system that combines nuclear power generation, construction engineering, scientific R&D and nuclear fuel supply. Its business has also expanded into wind power, hydropower, solar power and other types of clean energy.
 
To echo SASAC’s call for improved management, CGN launched the internal control system building project under the guidance of SASAC and in compliance with “Standard for Enterprise Internal Control” and “Implementation Guidelines for Enterprise Internal Control” that were collectively released by five ministries, including the Ministry of Finance.
 
The project was commissioned to Dacheng in 2012. Instead of letting the group’s finance department lead the internal control building endeavor, the group adopted Dacheng market development head Xu Yongqian’s suggestion that Dacheng coordinate external intermediaries and the general counsel coordinate all departments within the group. Attorney Yan Liping, as the leader of the Dacheng team, communicated quite a few times with CGN over the layout of the internal control system before reaching a consensus that the ultimate system should first focus on the headquarters and one core subsidiary and then be promoted over all other subsidiaries. The project, which started in 2013, lasted nearly one year.
 
The Dacheng team worked carefully and diligently for the project, no matter where they were, either at the headquarters in Shenzhen or at the beautiful Daya Bay. With the help of the group’s legal department, attorney Yan Liping and KPMG project leader provided training for relevant personnel from the group company and its subsidiaries. To ensure the training would get the optimized outcome, attorney Yan did huge amount of preparatory work, including making business plans and finding exemplary cases. The team identified business types of the group, divided internal control units, finalized internal control procedures, identified risks and weaknesses, designed key control measures, made improvement plans, compiled indexes that define rights and responsibilities of each posts, separated incompatible responsibilities and prepared internal control brochures. A team led by attorney Xu Wenping working at a construction engineering subsidiary offered engineering-related advice.
 
There are three notable things about the project. First, the project led by the general counsel, a law firm and an audit company fully brought into play the advantages of each party, which will set an example for other central enterprises to follow. Second, risk-management-orientedness will represent the development trend of internal control system building, where lawyers will have a more important role to play. Third, Dacheng successfully expands into the internal control business, thanks to its expertise in comprehensive risk management and legal risk management.
 
The Dacheng team exhibited a strong sense of teamwork and expertise in the task, winning commendation and recognition from the client.