Two corporate investigators, a Briton and an American, have been arrested in Shanghai on charges of illegally selling personal information about Chinese citizens, police announced Tuesday.
The detentions coincided with the announcement in July of an investigation into possible bribery of doctors by employees of pharmaceutical company GlaxoSmithKline (NYSE: GSK). That prompted suggestions their case might be linked to Glaxo, but Tuesday’s announcement made no mention of that.
The announcement was the Chinese government’s first word on Peter Humphrey, who is British, and Yingzeng Yu, a married couple who operate ChinaWhys Ltd., an investigation firm in Shanghai that serves corporate clients. They were detained in July.
Humphrey is founder of ChinaWhys. He and his wife have “expressed extreme regret for their actions, and have apologized to the Chinese government,” the government 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.
GSK was reported by the Wall Street Journal to have hired the company.
The communist Beijing government operates an extensive surveillance network to track China’s public but is tightening controls on access to personal information by companies and individuals.
Communist leaders were embarrassed last year by news reports that disclosed details of the family wealth of Xi Jinping, the new ruling party leader, and retiring Premier Wen Jiabao.
Earlier, several Chinese companies complained about investigations into their operations that led to a fall in their share prices on foreign stock exchanges.
Several dozen reports prepared by Humphrey and Yu 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 Aug. 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.
A report about the case on the state television 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 apologize 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.
Tuesday’s announcement said Shanghai police are investigating 126 people on suspicion of improperly gathering personal information and have detained 35.
ChinaWhys says its services include screening potential employees or business partners.
It is one of a number of such firms in China that serve foreign and local companies that want to protect themselves against fraud, embezzlement or misconduct by employees or business partners.
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, fraud investigation and crisis mitigation, according to the ChinaWhys website.
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, according to the company.
In January, a court in Shanghai sentenced four former executives of a unit of Dun & Bradstreet Corp. to up to two years in prison on charges of illegally buying information about Chinese consumers. The company was fined 1 million yuan ($160,000).
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.
[GSK operates its North American headquarters in Research Triangle Park, N.C.]
[GSK ARCHIVE: Check out more than a decade of Glaxo stories as reported in WRAL Tech Wire.]