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Octopus Shareholder Criticizes CEO Prudence Chan Over Private Data Sales
The majority shareholder of Octopus Holdings Ltd. criticized the electronic payment company’s management over the sale of nearly 2 million customers’ private data and said the Octopus board must determine her status.
While Octopus Chief Executive Officer Prudence Chan remained in her job yesterday, the matter put the company’s reputation “at risk,” said Raymond Chien, chairman of Hong Kong’s MTR Corp., which holds 57.4 percent of Octopus.
The MTR board met for more than three hours before Chien faced reporters and apologized for “inconsistencies and errors in public communications made by Octopus management.” Chan first said data had not been sold then told a hearing by Hong Kong’s privacy commissioner July 26 that Octopus had done so. Chan said Octopus had made HK$44 million in revenue selling information on 1.97 million customers to six companies.
Octopus cards are used by millions of Hong Kong residents for daily purchases including subway and bus rides and fast-food meals. MTR operates Hong Kong’s subway trains and develops property.
“The board of MTR is deeply disappointed with Octopus management’s handling of the matter,” Chien said yesterday. “There is public and media interest regarding the future of the CEO of Octopus Holdings, Ms. Prudence Chan. The employment of the Octopus CEO is the responsibility of the Octopus board and this is a matter for the Octopus board to decide.”
Core Business
MTR is “of the view that Octopus needs to get back to its core, so to speak, to focus on being one of the best electronic payment systems in the world,” Chien said. MTR had directed its representatives on the Octopus board to ”improve the company’s management,” he said.
Octopus had no comment on whether Chan should keep her job, said a spokeswoman who didn’t give her name, citing company policy. The Octopus board will meet soon on the matter, the spokeswoman said.
Chan said in a press conference July 7 Octopus had never sold customer data, newspapers including Apple Daily, Ming Pao Daily and Hong Kong Economic Times reported.
Lawmaker Lee Cheuk-yan said yesterday MTR should share the blame for the sale of private data by Octopus.
“Yes, Ms. Chan must be held accountable, but MTR, the majority shareholder of Octopus, is also responsible as Chan reports to its board,” Lee said.
Octopus cards are used by Hong Kong residents who swipe them over scanners for transactions such as subway and bus rides and at fast-food outlets and convenience stores. While the cards can be purchased for cash, customers who participate in a rewards program with the card must provide personal details.
Chan, who joined Octopus from Visa International in 2006, apologized and said July 26 the company would no longer sell private information of its customers.
To contact the reporter on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net
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