Peter Humphrey and Yingzeng Yu operated a firm in Shanghai that helped companies screen potential business partners and employees. Their arrest last August sent a chill through foreign businesses. It came as Beijing tightened controls over information and prompted warnings that investigation of legitimate matters might be curtailed.
On Friday, Yu said 90 to 95 percent of the data they obtained came from household registration documents that list family members and their birth dates, according to a trial transcript released by the Shanghai No. 1 Intermediate Court.
Yu said such information was useful in revealing misconduct such as an employee setting up a competing company under a relative's name. She said the firm was paid 20,000 to 200,000 yuan ($3,200 to $32,000) per case.
"The purpose of our obtaining individual information was to help prevent and fight corporate internal corruption," Yu said.
Shanghai police have said several dozen reports prepared by Humphrey and Yu for clients "seriously violated the legitimate rights of citizens." They contained home addresses and information on family members, real estate and vehicles. Clients included manufacturers, law firms and financial institutions.
Such information can make clear who controls a company or reveal family ties that might lead to conflicts of interest in a secretive Chinese business world dominated by behind-the-scenes connections. But the ability of investigators to reveal such links might alarm political leaders who want to hide wealth amassed by their family and business figures who profit from ties to the ruling Communist Party.
In 2012, communist leaders were embarrassed by news reports that disclosed details of the family wealth of Xi Jinping, the new ruling party leader, and Wen Jiabao, who was premier at that time.
Humphrey and Yu worked under contract for British pharmaceutical giant GlaxoSmithKline, which is accused in a separate case of bribing Chinese doctors and hospitals to use its products. Their arrest coincided with an investigation of Glaxo but authorities have not indicated whether the two cases are linked.
A conviction appeared almost certain after Chinese state television showed Humphrey last year saying he used "illegal means" to obtain information.
Humphrey and Yu's firm, ChinaWhys Ltd, said on its website it specialized in "discreet risk mitigation solutions" and investigations "walking multinationals through the labyrinth of opportunity, risk and unfamiliar cultural environment."
At the time of their August 16 arrest last year, Shanghai police said they were investigating 126 people on suspicion of improperly gathering personal information and had detained 35. Few details of the other cases have been released.
Beijing began tightening control over corporate information in early 2012 after Chinese companies were hit by disclosures about possible financial misconduct.
Possibly in response to that, regulations issued in February 2012 prohibit government agencies from disclosing financial or commercial information about a company without its permission.
That made it harder for companies to investigate potential Chinese partners or acquisition targets to find liabilities or conflicts of interest. Known as "due diligence," it is a common practice in other countries.
On Friday, Humphrey said he purchased information from three Chinese investigators who obtained it from law firms and other sources, according to the trial transcript.
"We would ask other consulting companies to help us and they could help us obtain the personal information of Chinese citizens," Humphrey said.
Humphrey and Yu objected to suggestions they were spying. Humphrey complained Chinese authorities had translated his use of the word "monitoring" in a report as spying. Yu said 95 percent of their work was done on the Internet. Humphreys said other information came from talking to clients' employees.
Yu said that since 2011, the firm had significantly reduced the amount of personal information it gathered.
"You mention stalking and spying. But that happened very rarely," said Yu. "Normally we would hire a third party to do it."
Yu went to the United States in 1981 at age 28 and later became an American citizen.
On Friday, her lawyer expressed frustration that she insisted on speaking English in court. The judge, Yu Jian, said the court had discussed the issue of language in advance and Yu was allowed to continue in English.
Other companies that supply information also are under pressure.
In January, 2013, four Chinese employees of a unit of Dun & Bradstreet Corp., which provides credit and other company information, were sentenced to prison on charges of improperly buying personal data of Chinese citizens. The company was fined 1 million yuan ($160,000).
Humphrey, a former reporter for the Reuters news agency, has worked as an investigator for the past 14 years in Asia, focusing on white-collar crime prevention and fraud investigation, according to his company's website.
It said Yu has worked for or advised companies in the United States, Hong Kong and China in technology, medical products and other industries over a 25-year business career.
http://ift.tt/1kZis8I Jinping,ChinaWhys Ltd,British-US investigative couple
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