Foreign fraud investigators were arrested in China for doing their job

Forget it Jake, it’s Chinatown.
Forget it Jake, it’s Chinatown.
Image: AP/Eugene Hoshiko
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Beijing has shed a little more light on the long, puzzling detention and subsequent arrest of Peter Humphrey and Yingzeng Yu, the co-founders of the risk assessment firm ChinaWhys, and it is sure to strike fear in the already-spooked community of foreign consultants and advisers doing business in China.

Specifically, the couple “illegally trafficked a huge amount of personal information on Chinese citizens,” according to the state-owned Xinhua news agency. The police seized 500 investigative reports and “more than 10 were found to have infringed on Chinese citizens right of privacy.” A Shanghai investigator interviewed on state-run CCTV said the two paid for information which they sold for an annual profit of nearly $1 million.

Humphrey, who is British, and Yu, who is a naturalized American citizen, had worked with GlaxoSmithKline in the past and according to multiple reports were hired by the pharma giant to investigate Chinese allegations that it made nearly $500 million in illegal payouts to doctors and officials to grow its business. The couple, described as well-connected veteran advisers, were detained in Shanghai in July, and officially arrested in August for breaking Chinese laws related to personal information.

As Quartz has reported, China has been using its privacy laws to crack down on private investigators. According to Xinhua’s report, Humphrey and Yu were in possession of illegally-held information on “residence addresses, family members, exit-entry information and real estate”—in other words basic information that any investigation into bribery in China or any other country would probably uncover. These and other records considered public information in many other countries are private in China.

Other foreign companies under fire in China for alleged bribery or wrongdoing, may want to treat the charges against Humphrey and Yu as a warning.

The couple have “confessed to their criminal facts and apologized to the Chinese government,” police told Xinhua. A man who appeared to be Humphrey—his face was blurred and he was not clearly identified—was shown in the CCTV report admitting the firm used “illegal means” to get information. “I am very regretful for this situation and apologize to the Chinese government,” said the man.