Hired by Glaxo, sentenced to prison

David Barboza has an article in The New York Times about Glaxo's travails in China:

In the spring of 2013, GlaxoSmithKline, a British pharmaceutical giant, hired a firm to investigate a former employee, who was suspected of trying to smear the drug maker’s top executive in China. Glaxo management told the firm’s British investigator that the company had received a sex video of the executive. The investigator called the case Project Scorpion.
The investigator, however, and his business partner, who is also his wife, turned out to be on a collision course with Chinese authorities. And they were given prison terms after pleading guilty to violating ordinary citizens’ rights.
In a highly anticipated one-day trial, the investigator, Peter Humphrey, and his wife, Yu Yingzeng, admitted that they regularly bought confidential government records to help them research corporate fraud for their risk management consulting firm, according to a transcript of the court hearing (photo). Their actions were usually taken on contract for foreign or multinational companies.
The couple’s arrest last year stunned the international community, and has had a chilling effect on companies that engage in due diligence work for global companies, many of whom believe the couple may have been unfairly targeted. The companies sell services considered essential to doing business in China, like background checks. But because public records are limited and corruption is rampant, it can be a difficult business.
Yu was sentenced to two years in prison.
The court said Humphrey would be deported after he serves his term of two and a half years. The couple was also ordered to pay about $55,000 in combined fines, and Yu was sentenced to a two-year term. They can appeal.
According to transcripts released by the Shanghai No. 1 Intermediate Court, Glaxo was not specifically mentioned in the trial. The foreign news media was not permitted inside the courtroom, but was allowed to see photos and summaries of the proceedings on the court’s blog.
Under questioning by prosecutors, Humphrey, 58, and Yu, 60, a Chinese-born American citizen, acknowledged that, from 2009 to 2013, they obtained about 250 pieces of private information about individuals, including government-issued identity documents, entry and exit travel records and mobile phone records, all apparently in violation of China’s privacy laws. But the couple insisted in testimony released by the court that the information was used to combat fraud. At one point, Yu said that she did not realize her actions were illegal. “We did not know obtaining these pieces of information was illegal in China,” she said, according to a court transcript. “If I had known, I would have destroyed all the evidence.”
Looming behind the proceedings was Glaxo. The Chinese authorities detained Humphrey and Yu in July of 2013, several months after Glaxo asked their firm, ChinaWhys, based in Hong Kong, to investigate whether a former Glaxo employee was passing information about suspected fraud at the company to the Chinese authorities. According to people briefed on the case who spoke only on the condition of anonymity, the former employee was targeting Mark Reilly, the company’s top executive in China.
Stephen Rea, a spokesman for Glaxo, noted that the company had not been named in the trial and said that GlaxoSmithKline required all contractors “to conduct themselves in accordance with the laws and regulations of the environment in which they operate”.
The ChinaWhys investigation began in April of 2013. Glaxo executives told Humphrey, a former journalist turned corporate detective, that, in March of 2013, the drug company had received emails and a sex video of Reilly recorded without his knowledge or consent, apparently with a camera placed inside his Shanghai apartment bedroom.
By June of 2013, Humphrey had completed a preliminary report into the former employee, a Chinese citizen, without concluding whether that person was behind the video or emails attacking Reilly and the company. Humphrey proposed extending the case.
But shortly thereafter, the Chinese authorities raided several Glaxo offices in China and arrested four senior executives, all Chinese-born. Some confessed on state-run television to bribery, fraud, and taking kickbacks from a travel agency used by Glaxo employees. The authorities accused the drug maker of engaging in widespread bribery, fraud and tax-related crimes, accusations that Glaxo has since acknowledged and called shameful.
In early July of 2013, the authorities detained Humphrey and Yu. Just over a month later, they were formally arrested, accused of illegally obtaining private information while doing business for ChinaWhys and an affiliated Shanghai-based company, Shelian, both of which engaged in consulting and due diligence work for corporate clients, according to court transcripts.
At the time, Glaxo executives gave no indication that the arrests were linked to the work by ChinaWhys on its own case. But, in late June of 2014, after the British news media published details about the video, the drug company acknowledged that ChinaWhys had been hired after Reilly came under attack from an anonymous whistle-blower.
The family of Humphrey says the arrests were very likely linked to the Glaxo investigation. In interviews, the couple’s nineteen-year-old son, Harvey Humphrey, has quoted his father as saying that he would not have taken the assignment from Glaxo if he had been aware of the full details and accusations of the suspected whistle-blower, claims that he said that the company told him were unlikely to be true.
Harvey Humphrey read a statement outside the courthouse after the verdict, according to a family friend, expressing hope that his parents would be released “on medical grounds.”
Yu has a kidney ailment, the friend said, and the elder Humphrey has arthritis and hernia and prostate problems.
In May of 2014, the authorities stepped up their case against Glaxo, accusing Reilly, a British national, of ordering his staff at Glaxo to commit bribery, and he was ordered not to leave the country.

Rico says, as an ex-GSK employee (fired, of course, but not for bribery), he can only gloat over their discomfort...