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TRADE WARS
China court jails British, US investigators hired by GSK
by Staff Writers
Shanghai (AFP) Aug 08, 2014


China says local, foreign firms treated same in probes
Beijing (AFP) Aug 09, 2014 - China said Saturday that its Anti-Monopoly Law does not discriminate between foreign and domestic companies, as big name overseas enterprises have come under a series of high-profile investigations.

The Ministry of Commerce issued a statement noting that foreign firms such as Microsoft and Mercedes-Benz have been probed as has the Chinese unit of a US food supplier.

Ministry spokesman Shen Danyang said that anti-monopoly probes were meant to promote fair competition and protect consumer rights.

He said such investigations were also common practice internationally.

"Looking back at the past six years after the Anti-Monopoly Law took effect, both domestic and foreign firms have been probed according to the law," he said in a statement, the official Xinhua news agency reported.

The statement appeared intended to reassure foreign businesses as Shen also made a point of stressing the positive and important role they have played in China's economic and social development for more than 30 years.

"The Chinese government has always been dedicated to creating an equitable business environment for companies and safeguarding the order of market competition," he said, according to Xinhua.

Foreign pharmaceutical companies including Britain's GlaxoSmithKline (GSK) have also been the targets of wide-ranging investigations.

Others businesses, such as Apple and Starbucks, meanwhile, have sometimes received unfavourable coverage in state media over issues regarding service and pricing.

On Wednesday China vowed to punish German luxury brand Audi and Chrysler of the United States for "monopoly behaviour".Two days earlier anti-monopoly investigators raided a Shanghai office of Mercedes-Benz.

A total of 12 Japanese companies were under investigation for monopoly pricing of auto components and bearings, though their names have not yet been announced.

A Chinese government agency said earlier that it was investigating Microsoft for allegedly operating a monopoly after raiding four of its offices around the country.

Chinese authorities investigated GSK following allegations it systematically offered bribes to doctors and hospitals and passed the cost on to consumers through high prices.

China, which is frequently hit by food safety scandals, is currently experiencing one over expired meat that has engulfed a local unit of US food supplier OSI Group.

OSI subsidiary Shanghai Husi Food Co. operated a factory shut down by authorities for mixing out-of-date meat with fresh product and selling it to fast food chains in China. Its clients included McDonald's and KFC.

Regarding the Shanghai Husi Food issue, Shen said the ministry had urged companies to stop selling the affected products and to cooperate with authorities in their probe.

A British investigator once hired by scandal-hit pharmaceutical giant GSK in China was sentenced to two-and-a-half years in jail for breaching privacy laws, a Shanghai court said Friday.

Peter Humphrey and his American wife Yu Yingzeng were hired to investigate the source of a lurid sex tape of the China boss of GlaxoSmithKline (GSK), shortly before the British firm became embroiled in bribery allegations.

"Defendant Peter William Humphrey who had committed the crime of illegally obtaining citizens' personal information was sentenced by the court to two years and six months in jail, with a fine of 200,000 yuan ($32,000) and will be expelled from the country," a court official said, adding that his wife Yu would also be jailed.

"Both Humphrey and Yu Yingzeng said they regretted their actions and expressed their apologies when making their final statements," court spokeswoman Tang Liming added.

GSK is the most high-profile target of wide-ranging Chinese inquiries into foreign pharmaceutical firms, as Beijing also mounts probes into overseas companies in sectors ranging from cars to baby milk.

But at no point did prosecutors mention the British firm when questioning Humphrey or Yu on Friday, according to transcripts posted online by the court.

The couple's son, Harvey Humphrey, told AFP that he was "very sad" about the verdict.

"I did not expect the sentence to be that long. I thought they would be jailed but I did not expect it would be for that long," he said.

He also said that he hoped "the authorities will take into account my parent's poor health conditions", without giving details.

- Information 'resold to clients' -

Chinese prosecutors accused the couple of illegally obtaining more than 200 pieces of information on Chinese individuals, which they resold to clients.

"Generally speaking... I don't dispute (the prosecutor's indictment)," Humphrey told the Number One People's Intermediate Court in Shanghai, it said on a verified microblog account.

It posted a picture of Humphrey facing a judge wearing a dark suit while Yu wore a smart red jacket, each of them with an arm gripped by a uniformed officer.

Foreign media were not allowed into the courtroom.

The sentence was announced late in the evening after a trial which lasted almost 12 hours. Yu's jail term was two years and she was fined 150,000 yuan.

The spokeswoman also said that the two did not appeal in court.

"We sold consulting services, which sometimes included personal information," Humphrey said according to the court, adding that he was unclear about the relevant laws and details of particular cases.

"We asked other companies to help us to obtain people's household registration information, and we would pay a fee" for the service, he said.

He denied an accusation that he had "tailed" clients, but said he may have sent staff to "stand outside" an office to monitor it.

"The services we supplied aim at reducing risks, especially risks in regard to fraud and corruption," he added.

Yu said she had "no dispute with the evidence provided by the prosecution," but denied that she had sold personal data to other firms.

"We gathered information not so we could sell it, but so we could write reports," she said, adding that household registration data was obtained to check on corruption.

- Near-perfect conviction rate -

The case has raised concerns amongst foreign investors in China, who often hire independent investigators to conduct due-diligence investigations into Chinese companies.

Chinese courts have a near-perfect conviction rate in criminal cases -- 99.93 percent last year.

Chinese authorities are investigating several foreign pharmaceutical firms over pricing and other issues.

GSK has been accused of systemic corruption, and in May its former China boss Mark Reilly was charged with ordering employees to bribe hospitals, doctors and health institutions to gain billions of dollars in revenue.

China's healthcare sector is widely considered to be riddled with graft, partly the result of an opaque tendering system for drugs and doctors' low salaries.

Humphrey, a former journalist and longtime China resident who founded an investigative firm, ChinaWhys, was reportedly hired by GSK to look into the origin of a covertly filmed video of Reilly and a girlfriend.

Humphrey's wife worked as ChinaWhys' general manager.

The duo have been paraded in prison suits by state broadcaster China Central Television (CCTV), which earlier aired a televised "confession" by an unshaven Humphrey.

China originally said the couple's trial would be held in secret, but the Shanghai court said last month it would hold "open" proceedings.

In practice that has meant the delayed transcripts of the trial being posted on the microblog account, which was being shown on a screen to reporters in a separate room in the court building.

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