Tuesday, August 27, 2013

Fraud Investigators Arrested For Investigating Fraud

More details are emerging on the arrest of fraud investigators Peter Humphrey and Yu Ying Zeng who have been arrested for (and we wish we were joking about this) violating the privacy of Chinese citizens.

According to the official account on Xinhua, around 500 reports compiled by the married couple violated privacy laws, giving details of exits and entries by Chinese citizens, as well as address, phone numbers and information on real estate deals.  The couple were detained on July 10th, as they were investigating the GSK bribery scandal.

A video showing the apparent confession by Humphrey has been posted on the CCTV website, "I sometimes used illegal means to obtain personal information.  I very much regret this and apologize to the Chinese government.".  A number of commentators said that the man who made the confession had his face blurred, and it was not possible to confirm his identity.

The arrest has a chilling effect on the already skittish foreign consultancy and advisory community in China.
“When I started in Hong Kong in the early nineties, you had people who were China consultants, and whatever you wanted do in China, they could help you do it,” said Jeremy Gordon, the founder of China Business Services. “Now, China has become such an important part of the economy, and everyone needs to be there, so you have specialized people to do specific things.”

A smug Xinhua editorial proclaimed that "Whether it's a Chinese person or foreigner engaging in illegal activities, public security organs will firmly crack down without holding back," although the privacy laws that have been updated are broad enough to probably do more harm than good.  Earlier this year, 89 private detectives in Hubei Province were raided, and another 74 were the target of a police crackdown in Chongqing.  The Shanghai based firm run by Humphrey and Yu, ChinaWhys, was described in official Chinese reports as a "illegal investigation company.”

A spokesman for the United States Embassy in Beijing, Justin Higgins, said consular officers had visited Ms. Yu on July 16, soon after she was first detained. “We remain in contact with Ms. Yu and will continue to provide consular assistance,” Mr. Higgins said. A spokesman for the British Embassy in Beijing said he had nothing more to say at this stage.

 


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