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China confirms trial of GSK foreign investigators China charges GSK foreign consultants with illegal investigation
(about 3 hours later)
Prosecutors in Shanghai have indicted two foreign investigators linked to the pharmaceutical firm GlaxoSmithKline (GSK), which is at the centre of a bribery scandal in China, state media has reported. Chinese prosecutors have formally indicted a British-US couple on the charge of "illegally obtaining private information on Chinese citizens", one year after they were detained in connection with an increasingly murky bribery case against the British drugmaker GlaxoSmithKline.
The British national Peter Humphrey and his wife, Yu Yingzeng, a US citizen, are charged with illegally obtaining private information on Chinese citizens, the official news agency Xinhua reported on Monday. The case is the first indictment by Chinese prosecutors against foreigners for illegal investigation, the report said. Peter Humphrey, a 58-year-old British national, and Yu Yingzeng, a 61-year-old US citizen, who ran a Shanghai-based corporate investigation consultancy for foreign businesses operating in China, will be tried in the city on 7 August, friends of the family have said. Family members and foreign diplomats are to be barred from the court.
In other cases, state media have cited legal experts saying the maximum penalty for illegally obtaining and trading personal information is three years in prison. Humphrey and Yu founded ChinaWhys in 2004 to help corporations identify potential risks in the China market and investigate claims of embezzlement and other corporate crimes.
The two will be tried on 7 August in a closed session shut to relatives and diplomats, a family friend who asked not to be identified told AFP earlier this month. GSK hired the consultancy last year to investigate a "serious breach of privacy and security", apparently involving a video showing the firm's then-China boss, Mark Reilly, having sex with his girlfriend in his Shanghai home. The video was emailed anonymously to 13 GSK executives, along with other emails containing detailed allegations of serious fraud.
Prosecutors told Xinhua that the couple had illegally sold personal information including details of household registrations, property and car ownership, call logs and exit-entry records to multinational corporations in the country, including GSK China. The state news agency Xinhua said it was the first time foreigners in China had been charged with illegal investigation.
Information was either bought or obtained through means including secret photography or infiltration, according to Xinhua. "The personal information traded by the couple included household registration details, background of family members, real estate, vehicles, call log and exit-entry records," Xinhua said. "Apart from buying information illegally from others, the couple also obtained the information by means such as secret photography, infiltration or tailing after someone."
Humphrey, a veteran fraud investigator and former journalist for the news agency Reuters, founded the Shanghai-based risk advisory firm ChinaWhys in 2004, while Yu worked as its general manager. Before founding the firm, Humphrey was a foreign correspondent for Reuters and Yu a financial consultant.
GSK hired Humphrey to investigate the origin of a sex tape of Mark Reilly, the former boss of its China division, Britain's Sunday Times newspaper has reported. Anne Stevenson-Yang, research director at Beijing-based J Capital Research and a friend of Peter Humphrey's, said the Briton "was always concerned that there was a certain amount of risk involved, but I think he felt he was safe because he was only investigating foreign companies. He thought he could steer clear of domestic companies that would wish him ill."
The recording emerged just before Beijing launched a bribery probe into the company. Humphrey and Yu were formally arrested last August, weeks after China announced an investigation into GSK for paying "massive bribes" to doctors and hospital officials to sell its products. Humphrey told investigators that he felt "betrayed and used" by GSK, state media reported, adding that the pharmaceutical firm had led him to believe that the bribery allegations were false, but his investigations found them to be true.
Reilly was accused of ordering employees to bribe hospitals, doctors and health institutions to gain billions of dollars in revenue, Chinese authorities said in May after a 10-month investigation. Stevenson-Yang said that in China, "illegal" information was an ill-defined and constantly-changing category. "There are vendors in China that will sell you anything," she said. "And it can be very difficult to sort out who's legally entitled to sell you what."
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. She continued: "There are all sorts of data sets – custom import/export sets, regulatory data for companies. And there are agents who get authorised to sell that data. But the data comes with all sorts of attachments and requirements, and it can be difficult to decide how you're going to use it."
The government has since last year launched sweeping investigations into alleged malpractice by foreign companies in several sectors, including the pharmaceutical and milk powder industries. The couple's 19-year-old son Harvey Humphrey said in a statement earlier this month that he had not seen his parents in a year, and that their health was deteriorating in prison.
GSK had hired Humphrey to investigate Vivian Shi, a 49-year-old government relations employee at GSK who had recently left the firm on bad terms. Shi has denied being the whistleblower.
"I think what's happening to Peter Humphrey and his wife is a result of politics – not in the sense of somebody trying to change the political landscape, but of someone using their connections to put a stop to what he was doing," said a foreign businessman who has been operating in China since the 1990s. "Everything is connected with politics, but it's not pure politics – there are a lot of other things going on as well."