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.