Youku head arrested as Chinese tech struggles with graft

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The head of the video platform Youku, Yang Weidong, has been detained on suspicion of economic crimes according to the website's owner Alibaba, in the latest incident of corporate corruption inside a leading Chinese tech company.

A spokeswoman for Alibaba said on Tuesday that Yang was assisting authorities “with an investigation into an alleged case of seeking economic benefits.”

Later on, in a filing to the US Securities and Exchange Commission, Alibaba confirmed that Youku's president Yang Weidong had stood down from his role and had been arrested.

The statement added “we do not tolerate any form of unethical or unlawful conduct,” without giving more details about the investigation.

Alibaba's filing came days after Meituan Dianping, one of China's biggest retail services and food delivery platforms, announced that 89 employees of the company and affiliated businesses had been investigated for corruption.

In a statement published Monday, Meituan Dianping said it had uncovered at least 29 cases of corruption since February 2018, involving 30 people within the company itself and 59 within the Meituan Dianping “ecosystem.”

Among the employees under investigation, the senior head of Meituan Dianping's takeaway division was removed from his position for “improper economic relations with agents,” according to the statement.

Despite emphasizing its “zero-tolerance” approach to graft, this latest case of mass corruption at Meituan Dianping comes after dozens of similar cases made public in the past two years.

Meituan and Dianping merged in 2015, with the company's Hong Kong IPO in September this year raising 4.2 billion U.S. dollars. /VCG Photo

In 2017, an internal email was leaked to media, revealing 10 cases of corruption involving 12 employees and sellers on Meituan Dianping's platform.

In 2016, 30 employees were referred to authorities, also for involvement in graft.

Last February, Meituan Dianping joined forces with 14 companies including Baidu, Walmart China, JD.com and Tencent to form the Trust and Integrity Enterprise Alliance (TIEA).

According to its official website, TIEA was established to “jointly build a safe scientific and technological Great Wall against corruption,” as well as to “promote the construction of professional ethics of employees.”

While TIEA offers businesses a platform to share data and information on corruption and fraud, this week's cases at Youku and Meituan Dianping will increase concerns for investors inside and outside of China that not enough is being done to fight corporate graft.

TIEA did not respond to requests for comment on Yang Weidong or the Meituan Dianping corruption case.

Corruption has been a consistent problem for fast-growing, cash-rich tech platforms in recent years.

In 2016, Li Mingyuan, an executive in charge of mobile products and operations at Baidu, was forced to step down after a probe into his dealings with another company.

JD.com has gone public with a number of corruption incidents in recent years, announcing internal anti-graft campaigns. In August alone, JD.com announced it had uncovered 16 corruption cases, including one executive who had used company resources to assist another unrelated business.

(Top image: Yang Weidong, then president of Youku, speaks at the 2015 Shanghai Television Film Festival, June 2015. /VCG Photo)