• Mon
  • Dec 29, 2014
  • Updated: 1:06am

Shanghai consultants admit wrongdoing over obtaining information

PUBLISHED : Wednesday, 28 August, 2013, 12:00am
UPDATED : Wednesday, 28 August, 2013, 10:38pm

Peter Humphrey and his wife, Yu Yingzeng, two risk consultants detained in Shanghai since July, have confessed to illegally obtaining information on the mainland, the Ministry of Public Security said yesterday.

The couple were part of a broader information crackdown that analysts fear will hurt transparency and multinationals' operations. The Shanghai government said yesterday that police had arrested 126 people in the city this month for "illegally gathering information", of whom 35 had been charged.

The ministry also said that the authorities had shut down ChinaWhys, a Shanghai-based risk consultancy founded by Humphrey, a British citizen, and Yu, a US citizen. It was the first case in recent years of mainland authorities shuttering a foreign firm for conducting illegal investigations, it said.

The ministry called ChinaWhys an illegal operation, even though it has operated for several years serving clients such as GlaxoSmithKline.

It said the couple were formally arrested on August 16.

"I have sometimes resorted to illegal means to obtain information. I deeply regret this and apologise to the Chinese government," Humphrey said in Putonghua on state broadcaster CCTV.

Video: Foreign couple detained in China over gathering personal information

Police searching the office of ChinaWhys had discovered dozens of reports that "violated the privacy of Chinese citizens", the ministry said.

An article by Humphrey dated May on ChinaWhys' website said the authorities detained more than 1,000 mainland investigators and their alleged sources in May last year and January this year. The article said it was apparently in retaliation for critical reports by US short-sellers on Chinese firms and international media stories about the wealth of the families of former and current Chinese leaders, including Bo Xilai , Wen Jiabao and Xi Jinping .

In January, risk investigators could no longer freely access corporate records held by the Administration of Industry and Commerce in China, said Humphrey's article.

"That's greatly worrying to the risk industry. It creates a lot of difficulties for multinationals in China," said an executive with an international risk consultancy.



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The Chinese government wants to find any way to keep their dirty dealings and corruption covered up. Peter was doing a great job, much in demand by (mostly foreign) companies doing due diligence. Now foreign companies will have less and less ways to discover with whom they are dealing. Transparency, zero. The only piece of advice now: stay away from the vast majority of Chinese deals as you have no way to know you are dealing with a genuine opportunity or with crooks. I have also been asked to do research on business people but I normally declined as we have no time for those assignments. Now foreign business people will have to navigate blindly.
This'll help cities like Shanghai topple places like Hong Kong, NYC and London to become THE premiere financial center of the universe! More opacity!!
No, I predict suddenly there will be a handful of new due diligence and research companies owned and operated by ex PSB types (or the children of connected officials), with the blessing of the CCP, that foreign media and MNCs will basically be forced to choose from.
Very similar to the alleged saga of British publisher Mark Kitto who had the carpet yanked out from under him and his successful "That's" magazines and being taken over by a local Shanghai entity.


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