UPDATE 2-China accuses Briton, American of illegally buying private data

Tue Aug 27, 2013 11:57pm EDT

By Megha Rajagopalan

BEIJING Aug 27 (Reuters) - China has accused two risk consultants, a British man and his American wife, of illegally buying and selling private information, state media reported on Tuesday, in what could be a widening crackdown on obtaining data for commercial purposes.

Peter Humphrey and Yu Yingzeng were detained in Shanghai on July 10. They have since been formally arrested, which typically means police believe they have enough evidence for a case to be brought to trial.

Police in Shanghai had arrested 126 people this month alone in a crackdown against the illegal collection of personal information, the Ministry of Public Security said in a statement on the case involving Humphrey and Yu.

It did not give details on the nationalities or professions of those arrested, or say precisely what they had done.

But the detention of Humphrey and Yu has already had a chilling effect on other risk consultants working in China, with some corporate investigators saying they had become more cautious about which projects to accept, avoiding any the government might see as sensitive.

Multinationals, banks and investors rely on corporate investigators for information about potential partners and investments in China, where a lack of transparency is a hurdle to doing business.

A police investigator in Shanghai, Lu Wei, said on state-run CCTV the couple "wantonly" obtained a lot of information on home registrations, international travel and property records.

They sold the information to lawyers, multinationals and financial institutions, CCTV said.

Humphrey said in a statement broadcast on CCTV that he had occasionally used illegal methods.

"I sometimes used illegal means to obtain personal information," Humphrey said in Mandarin to a camera as he sat handcuffed wearing an orange vest.

"I very much regret this and apologise to the Chinese government," said Humphrey, who worked as a journalist for Reuters in the 1980s and 90s.

BRITON'S FIRM DID WORK FOR GLAXOSMITHKLINE - SOURCES

ChinaWhys, the investigative risk consultancy Humphrey and Yu founded, worked for many firms including British drugmaker GlaxoSmithKline (GSK), sources familiar with the matter have said.

Chinese police have been investigating bribery accusations against GSK since July, although Chinese media reports on Humphrey and Yu made no mention of the firm.

GSK has declined to comment on the work ChinaWhys did for the company except to say that Humphrey is not, nor has he ever been, an employee.

In a statement, Britain's foreign office expressed concern at Humphrey's appearance on state TV.

"We were concerned to see that Peter Humphrey was interviewed about the details of a case which is currently under investigation and has yet to come to trial," the foreign office said, adding it was continuing to provide consular assistance to Humphrey and his family.

The American embassy could not immediately be reached for comment.

Jason Cai, a Chinese investigator who worked with Humphrey and Yu, was arrested around the same time, said a source with direct knowledge of the matter. Cai was not mentioned in the state media reports, and his arrest has not been announced.

The ChinaWhys website says Humphrey has worked as a risk management specialist and corporate detective for 14 years.

Cai Hua, a Chinese criminal lawyer, said it was difficult to say how heavy the penalty would be if the couple is convicted.

"For the most part, it rests on the extent of the damage the crime has done and the amount of information obtained," said Cai, who is not related to Jason Cai.

The couple "confessed to the crime without concealing anything," the official Xinhua news agency said. " actions seriously violated the personal privacy of Chinese citizens."

"Whether it's a Chinese person or foreigner engaging in illegal activities, public security organs will firmly crack down without holding back," the news agency said.

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