China sentences GSK-linked investigators to prison

SHANGHAI Fri Aug 8, 2014 10:07pm IST

A combination photo shows British corporate investigator Peter Humphrey (L) and his wife Yu Yingzeng as they leave the Shanghai No.1 Intermediate People's Court inside a police vehicle in Shanghai August 8, 2014. REUTERS/Aly Song

A combination photo shows British corporate investigator Peter Humphrey (L) and his wife Yu Yingzeng as they leave the Shanghai No.1 Intermediate People's Court inside a police vehicle in Shanghai August 8, 2014.

Credit: Reuters/Aly Song

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SHANGHAI (Reuters) - China sentenced a British corporate investigator to 2-1/2 years in prison on Friday for illegally obtaining private records of Chinese citizens and selling the information on to clients including drugmaker GlaxoSmithKline Plc.

Peter Humphrey and his American wife, Yu Yingzeng, who ran risk consultancy ChinaWhys, were tried in a Shanghai court. They said they were unaware such acts were criminal.

In a late evening verdict, the court said it found Humphrey and Yu guilty and handed Yu a slightly more lenient sentence of two years in jail. Humphrey was fined 200,000 yuan ($32,500), while Yu was fined 150,000 yuan.

According to a statement read out by a court official at a press conference, Humphrey will be deported. The court gave no further details about that aspect of the judgment.

"The two defendants illegally collected Chinese citizens' information over a long period of time and on many occasions. They collected a large amount of data and had also used illegal means, including investigative methods," said Tang Liming, vice-president of Shanghai No.1 People's Intermediate Court.

The couple have the right to appeal their sentence within 10 days, the court said, adding that it had confiscated a laptop and hard drive from them.

They were detained last year following work they did for British pharmaceuticals giant GSK, which is at the centre of a separate government corruption investigation involving hundreds of millions of dollars.

They have spent the last 13 months in a Shanghai prison.

Their testimony was being closely watched for any comments that could shed light on the GSK corruption probe, but there was no mention of the company during the one-day trial, even though prosecutors brought up investigations by other foreign firms.

CHILLS THROUGH INVESTMENT COMMUNITY

The trial has unsettled the foreign business community, which relies on risk consultancies for information on potential partners, existing employees or firms in China, where such data is not easily available.

Prosecutors charged that the couple had illegally obtained and sold more than 250 items of private information, including household registration data, real estate documents and phone records - a charge which could have led to a sentence of up to three years in prison.

Humphrey, a 58-year-old former journalist, and his wife acknowledged they were operating in a legal "grey area" at times when gathering information, but they had at no point thought they were doing anything unlawful.

"In other countries, we were able to conduct similar checks, including personal information and private transactions, legally through courts," Yu said, according to transcripts published on the court's microblog.

"If we had known that it was illegal, my husband and I would have destroyed all traces of this information."

Yu, who with Humphrey made her statements in English, also said she did not know that third-party consultants hired by ChinaWhys, one of them a registered lawyer, had obtained information illegally.

In testimony read out in court, Humphrey said the due diligence services offered by ChinaWhys largely relied on publicly available records and interviews with executives.

Foreign journalists had no access to the trial, but a television in the media room momentarily broadcast a grainy image which showed Humphrey, dressed in a polo t-shirt and jacket, sitting down inside the courtroom appearing weary.

The couple's 19 year-old son, Harvey, was in the courtroom with embassy officials. He told Reuters after the sentencing that he was sad about the verdict. "I hope the authorities will take into account my parents' poor health."

GSK LINKS

The couple's arrest last year coincided with a government probe into allegations that GSK staff had funnelled hundreds of millions of pounds through travel agencies to bribe local doctors and health officials to boost sales and raise prices.

While Chinese authorities have not directly connected the arrest of the couple to the GSK probe, Humphrey said in a note last year while in detention that he felt "cheated" by GSK, adding that the drugmaker had not shared the full details of the bribery allegations.

A GSK spokesman declined to comment on the trial. The drugmaker said in July that the issues relating to its China business were "very difficult and complicated."

The trial also coincides with a growing number of Chinese anti-trust probes that have seen authorities raid offices of Western firms, highlighting the obstacles foreign companies face in navigating China's murky business world.

Humphrey, who worked for Reuters as a journalist in the 1980s and 1990s, has previously apologised on state television for breaking any Chinese law.

In closing remarks to the trial, the couple stressed their love for China, and said they were sorry for their actions.

"My wife and I still love and respect China. My son is here to listen to China, and I've taught him that despite this case, he will still love and respect China," Humphrey said.

(Additional reporting by Shanghai Newsroom; Editing by Miral Fahmy and Mike Collett-White)

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