• Thu
  • Oct 2, 2014
  • Updated: 9:12am

Adviser to China's anti-trust committee fired for working for firm under investigation

PUBLISHED : Thursday, 14 August, 2014, 3:04am
UPDATED : Thursday, 14 August, 2014, 7:48am

An adviser to the government's anti-monopolies committee has been fired for allegedly working for a US-based company that is the focus of an antitrust investigation, state media reported yesterday.

Zhang Xinzhu, an economics expert at the Chinese Academy of Social Sciences, had been hired by the mobile chipmaker Qualcomm at the same time he told the anti-monopolies committee in evidence that the company had not breached antitrust laws on the mainland, China National Radio reported, citing unnamed sources.

Zhang had received large fees from the technology company and was sacked as an adviser by the State Council's Anti-Monopoly Commission for "disciplinary violations", the report said.

Qualcomm and the anti-monopolies committee did not reply to requests for comment and Zhang did not respond to calls yesterday.

It is thought to be the first time the body has fired an adviser, and comes as the central government investigates several foreign companies, including Qualcomm and Microsoft. Car companies such as Volkswagen and Mercedes-Benz are also lowering prices on the mainland amid accusations by the authorities that they are overcharging.

The European Union Chamber of Commerce in China said yesterday it had received several complaints that firms had been intimidated by antitrust investigators into accepting punishment without full hearings. The chamber said if joint ventures were accused, only the foreign company would be investigated.

Zhang said in an interview with a state-owned Shanghai news website that he had been sacked because he had defended foreign firms.

"It's just like I'm defending somebody on death row," he was quoted as saying. "In all cases there are pros and cons and why am I not able to have the right to speak?"

The government's top economic planning body, the National Development and Reform Commission, has previously rejected allegations of bias in antitrust investigations, saying the law is equally applied to foreign and domestic companies.

The state-run Securities Times reported last month that Qualcomm had been ruled by the authorities to have a monopoly and an unfair market position on the mainland. It could face fines in excess of US$1 billion.


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'Zhang had received large fees from the technology company and was sacked as an adviser by the State Council's Anti-Monopoly Commission for "disciplinary violations", the report said.' WHAT REPORT?
Strictly speaking, the "report" was wrong. In another paper's report -- a paper based in New York -- dated August 13th, Christine Trimble, vice president for government affairs at Qualcomm, stated “We retained, here in the U.S., Global Economics Group to conduct an economic analysis to be submitted to the N.D.R.C. Professor Zhang worked for Global Economics, and was one of three authors of the report.”
Personally, I believe that the operative question is not whether Zhang was paid to consult, but whether he fully disclosed his outside work to the government's anti-monopolies committee. If he didn't, then he deserved defenestration.
It would seem to me that this would leave the State Council's Anti-Monopoly Commission in the position of establishing what consulting fees ALL of their economic advisers have received and whether those fees have been disclosed to the commission. If lapses in disclosure should arise, then the commission needs to toss out more people than Dr. Zhang.
If they don't, then we may conclude what Dr. Zhang claims, that he was sacked for defending a foreign firm within a state commission, something that all foreign firms will take into account in making their future plans for the China market.
Qualcomm got away with any criminal charges for buying their way out.


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