China Says Briton Admits Illegally Gathering Data Amid Probe

China’s public security ministry said the British founder of a consultancy serving multinational companies confessed to illegally obtaining and selling private data on Chinese citizens.

Peter Humphrey, founder of ChinaWhys, and his wife Yu Ying Zeng, a U.S. citizen, have “expressed extreme regret for their actions, and have apologized to the Chinese government,” the ministry said in a statement today.

The couple, arrested in Shanghai on Aug. 16, were accused of illegally collecting personal information of Chinese citizens, including home addresses and names of family members and then selling the information in reports mainly to foreign companies such as manufacturers, financial institutions, and law firms, according to the ministry.

The statement made no reference to whether the arrests were connected to a bribery investigation of U.K. drugmaker GlaxoSmithKline Plc, which was reported by the Wall Street Journal to have hired the company, citing unidentified people with knowledge of the situation.

The pair were first detained by authorities on July 10, Reuters reported, the day before the ministry announced that Glaxo executives were under probe.

Glaxo is being investigated on allegations it used cash and sexual favors to bribe doctors and health officials in the country to promote sales of its drugs.A government crackdown against corruption has extended to other foreign drugmakers and local hospitals since China announced the Glaxo probe.

Garry Daniels, a spokesman for Glaxo, said in an e-mail on Aug. 21 that Humphrey has never been a Glaxo employee.

Discouraging ‘Detectives’

The government action against ChinaWhys increases the risk for the dozens of consulting companies operating in China that provide similar services, said Willy Wo-Lap Lam, an adjunct professor of history at the Chinese University of Hong Kong.

“It’s possibly a first salvo against these consulting companies as China wants to discourage these detectives of the commercial world,” Lam said in a telephone interview. “Information is not transparent in China, and there are all sorts of information on officials that the government does not want to get out as they could be potentially embarassing.”

Humphrey started ChinaWhys with his wife in 2003, and has about 100 clients a year with annual sales of several million yuan, according to the ministry statement. Calls to a Shanghai office number and a mobile phone listed on the ChinaWhys website weren’t answered.

‘Discreet Gathering’

On the ChinaWhys website, the company describes itself as “business advisers with eyes in China, walking multinationals through the labyrinth of opportunity, risk and unfamiliar cultural environment,” and listed services such as vetting of partners and “discreet gathering of timely business intelligence.”

State-owned CCTV broadcast a news segment today of a man which they implied was Humphrey, with his face blurred out and dressed in a black shirt and bright orange vest, confessing to illegal acts and apologizing to the Chinese government.

The Beijing-based couple moved ChinaWhys’ office to Shanghai in 2009 and hired more than 10 employees, the Public Security Ministry said in the statement. Shanghai police searched ChinaWhys’ offices and found more than 500 research reports, of which dozens of copies “seriously violated the privacy of Chinese citizens”, it said, adding that investigations are continuing.

Humphrey’s biography on the website listed his previous jobs as a foreign correspondent with Reuters and head of China investigations with PricewaterhouseCoopers, while Yu formerly served as China chairwoman of the American Chamber of Commerce’s Transportation and Logistics Forum.

— With assistance by Daryl Loo

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