Briton and wife held in probe into corruption

Police announced the arrest of the two corporate investigators who work in Shanghai, on charges of improperly selling personal information about Chinese citizens.

Peter Humphrey and Yingzeng Yu, a married couple, are part of an industry of investigators who help corporate clients screen potential partners and employees or watch for embezzlement and other employee misconduct.

“The opaque nature of the investigation and detention of the Humphreys is troubling at best and puts a serious chilling effect on legitimate efforts to investigate even benign, public information,” said James Zimmerman, managing partner of the Beijing office of the law firm Sheppard Mullin Richter & Hampton.

Several dozen reports prepared by Humphrey and Yu for corporate clients contained information that “seriously violated the legitimate rights of citizens”, the Shanghai police department said in a statement. It said they were formally arrested on August 16.

That included home addresses and information on family members, real estate and vehicles, the statement said. It said they were sold to clients including manufacturers, law firms and financial institutions.

Humphrey’s and Yu’s firm, ChinaWhys Ltd, says on its website it “specialises in discreet risk mitigation solutions, consulting and investigation services” aimed at “walking multinationals through the labyrinth of opportunity, risk and unfamiliar cultural environment.”

Humphrey, a former reporter for Reuters news agency, has worked as an investigator for the past 14 years in Asia, focusing on white-collar crime prevention, fraud investigation and crisis mitigation, according to the website. It says 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.

Humphrey and Yu are accused of paying £80 to £200 per item of personal information, the official Xinhua News Agency said.

A report about the case on the state television midday news showed two people in handcuffs with their faces blurred.

“To obtain this information, I sometimes used illegal means,” said the man, a Westerner, speaking in Mandarin. “I want to apologise to the Chinese government.”

The British Embassy in Beijing confirmed last week that Humphrey was arrested but gave no details of charges. The embassy said it was providing unspecified consular assistance to his family.

The American Embassy in Beijing said earlier that diplomats visited Yu on July 16. A spokesman said he had no additional information.

The detentions coincided with the announcement in July of an investigation into possible bribery of doctors by employees of pharmaceutical company GlaxoSmithKline. That prompted suggestions their case might be linked to Glaxo, but yesterday’s announcement made no mention of that.

The announcement said Shanghai police are investigating 126 people on suspicion of improperly gathering personal information and have detained 35.

Chinese companies have reacted angrily to disclosures of information by investigators.

In the highest-profile case, a US firm, Muddy Waters Research, accused Chinese forestry company Sino-Forest Corp of exaggerating the value of its assets.

Sino-Forest’s shares on the Toronto Stock Exchange plunged in value. Canadian police launched an investigation of the company, which filed a lawsuit accusing Muddy Waters of defamation.