Alibaba executive detained over Tencent graft

Updated: 2015-07-11 08:44

(China Daily)

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Alibaba executive detained over Tencent graft

Zhang Qiang (center), CEO of Alibaba Pictures Group Ltd, director Wong Karwai (second from right) and actor Tony Leung Chiu-wai (right) at the launch ceremony of the Chinese movie The Ferryman in Beijing on Jan 11.[Photo/China Daily]

Alibaba Group Holding Ltd was put under the spotlight after police detained Patrick Liu, president of the e-commerce giant's digital entertainment unit.

The company said in a statement on its microblog on Friday that Liu was taken into custody for his alleged involvement in a bribery case while he was working at Tencent Holdings Ltd.

Emphasizing the case has nothing to do with Alibaba, the Hangzhou-based company said: "We have already taken steps to ensure that the detention will not affect the business of Alibaba Pictures Group Ltd."

Liu joined Alibaba in August 2013, a month after he resigned from Tencent where he acted as the head of video department. Liu has been in charge of online literature and Yulebao, the world's first platform for individuals to invest in movies, at Alibaba.

The company said it will provide legal support to Liu who is also an executive director of Alibaba Pictures. Alibaba owns a 60 percent stake in the film studio.

In response to the arrest, Tencent said Liu was one of the five or six former employees who were detained by the police after a graft investigation.

"An internal probe brought to light bribery and corruption among some online video employees. We have already notified the police," the Tencent said.

The scandal comes as Alibaba Pictures ramps up efforts to expand its presence in the movie industry. Last month, the Hong Kong-listed company acquired a major software solution provider in China's film market with $134 million, making Alibaba the first Internet giant, compared with its major rivals Baidu Inc and Tencent, to expand into all movie-related businesses.

Huang Guofeng, an analyst at Beijing-based Internet consultancy Analysys International, said the case will have more impact on Alibaba's reputation than on its business operations.

"As a veteran in China's Internet sector, Liu is equipped with abundant resources. His detention is a loss to Alibaba and will definitely tarnish its brand to some extent," Huang said.

"But he doesn't play a very important part in guiding Alibaba's entertainment strategy since most of the company's important movie-related assets has been injected into Alibaba Pictures, an entity in which he has limited say," Huang said.

In April, Alibaba merged its online film-ticketing business Taobao Ticket and movie financing business Yulebao with Alibaba Pictures to couple its strength in e-commerce and its massive user base with the filmmaking affiliate's production function.

The scandal is not the first time that Chinese Internet giants conducted internal probes to tackle wrongdoings in their companies. In May, search engine Baidu dismissed eight employees after its anti-corruption investigation found four of its departmental directors and four sales staff from district branches took bribes.

Ma Si contributed to this story.