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China details charges against foreign fraud investigators
by Staff Writers
Shanghai (AFP) Aug 27, 2013


China signs up to anti-tax evasion pact
Paris (AFP) Aug 27, 2013 - China became on Tuesday the last of the G20 nations to sign up to an international pact to help crack down on tax evasion by stepping up the automatic data exchange, the OECD said.

The Group of 20 advanced and emerging nations pledged two years ago to sign up the pact as they stepped up efforts amid the global crisis to recover billions in funds that slip into offshore tax havens each year.

"Today's signing is both timely and important as the G20 has endorsed automatic exchange of information as the new global standard," OECD chief Angel Gurria said in a statement.

The Organisation for Economic Cooperation and Development, a policy forum for 34 democracies, said 56 countries had now signed up to the Mutual Administrative Assistance in Tax Matters, which provides a framework for states to automatically transfer data.

Tax evasion and tax avoidance strategies employed by multinationals are expected to be among the top issues discussed by G20 leaders when they meet next week in the Russian city of Saint Petersburg.

Chinese state television put two foreign fraud investigators on display Tuesday as police announced they had been charged with illegally obtaining personal information.

Police in Shanghai have arrested British national Peter Humphrey and his wife Yu Yingzeng, an American citizen, the Ministry of Public Security said in a statement.

They are accused of obtaining personal information and selling reports for "high prices" to clients, it added.

The statement did not mention the work their firm did for GlaxoSmithKline (GSK), following speculation their detention might be related to the British pharmaceutical giant, which is facing a bribery investigation in China.

In a report which appeared to be coordinated with the police announcement, China Central Television showed Humphrey walking in handcuffs and wearing the orange vest of a Shanghai detention centre. Yu was also shown.

"I deeply regret this matter and I apologise to the Chinese government," Humphrey said in the report.

Yu told state radio that their clients were multinational companies including manufacturers, financial institutions and law firms. No names were given.

Humphrey, a veteran fraud investigator and former journalist for the news agency Reuters, is the founder of Shanghai-based risk advisory firm ChinaWhys, while Yu worked as its general manager.

Police said the firm collected, bought or used other methods to obtain information about Chinese citizens including addresses, family members, travel, property and car ownership.

Of more than 500 investigative reports, "more than 10" had been found to violate the privacy of Chinese citizens, the statement said.

Police said the firm paid 800 yuan to 2,000 yuan ($129-$323) for each piece of information, China National Radio reported.

Humphrey set up the company in 2003, according to its website. He previously worked for US risk consultancy Kroll and PricewaterhouseCoopers in China.

Diplomats last week confirmed the formal arrest of the pair after several weeks of detention.

Chinese authorities have detained four GSK executives for allegedly masterminding a scheme to funnel bribes to doctors in return for buying the pharmaceutical firm's products.

GSK has admitted some of its executives violated Chinese law and pledged to cooperate with the investigation into it, which comes amid a broader government probe of foreign pharmaceutical firms operating in China.

US drugmaker Eli Lilly and France's Sanofi have both come under scrutiny after anonymous whistleblowers, cited by Chinese state media, claimed that employees paid bribes.

Eli Lilly said it was investigating, while Sanofi said it was taking the claims "seriously".

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