Detained Shanghai editor admits to news site's bribery-extortion scheme

[BalanceOfPower]

Detained Shanghai editor admits to news site's bribery-extortion scheme

Portal 'targeted' companies preparing for stock market listings

PUBLISHED : Thursday, 11 September, 2014, 3:08pm
UPDATED : Friday, 12 September, 2014, 3:11am

Laura Zhou [email protected]

One of the eight suspects detained by police in connection with the extortion scheme. Photo: SCMP Pictures

The detained chief editor of a major mainland business news portal appeared on a state media broadcast yesterday confessing to extorting hundreds of thousands of yuan from companies planning stock market listings.

Eight suspects, including Liu Dong, president of 21cbh.com and his editor-in-chief, Zhou Bin, were detained last month, along with executives from two public relations firms - Shanghai-based Roya Investment Services and Shenzhen's Nukirin Investment Advisory, Xinhua reported. The portal is affiliated with the 21st Century Business Herald, a major national financial newspaper.

According to a special task force investigating the alleged activities, the suspects targeted companies wanting to protect their reputation ahead of planned initial public offerings.

The news website is linked to the influential newspaper 21st Century Business Herald, which is read mainly by investors. Photo: Screenshot

"Once a negative report is published, the companies [targeted] in the news would have to voluntarily come to us or ask for cooperation through public relations companies," Zhou said in his confession. "Cooperation would cost between 200,000 yuan [HK$252,000] and 300,000 yuan, normally in the way of advertising deals."

Most of the extortion occurred during the "quiet" period ahead of an IPO, when firms are banned from releasing any information to the public that could influence the price, even if it is to correct misleading reports, Xinhua said.

"These companies would pay all they could to maintain a positive image. It didn't matter if these reports were authentic or [fraudulent]," Liu was quoted as saying.

The preliminary investigation found that since 2010 the portal had signed several hundred millions of yuan in advertising deals. It signed the deals with more than 100 companies on average in a year, most of which were listing or preparing to list.

The case was still under investigation, Xinhua said.

Shanghai police have also set up a hotline to receive tips about the case.

The 21cbh.com staff are also accused of taking bribes from financial public relations companies including Roya and Nukirin, two firms that were seeking closer ties with the media outlet, according to Xinhua.

Media watchers have said that such extortion is a widespread practice in the domestic press and journalists are susceptible to bribes.

The news comes amid a crackdown at CCTV, where the authorities have detained a top business news anchor and several senior executives on suspicion of bribery.

Additional reporting by Reuters