Yahoo CEO slammed over Chinese dissident

By Peter Kaplan

WASHINGTON (Reuters) - Yahoo Inc's chief executive was verbally lashed by U.S. lawmakers on Tuesday over the Internet company's role in helping identify a Chinese dissident who was later imprisoned by the government.

"While technologically and financially you are giants, morally you are Pygmies," Rep. Tom Lantos, chairman of the House Foreign Affairs Committee, told CEO Jerry Yang and Yahoo's general counsel, Michael Callahan, at the three-hour hearing.

Yang and Callahan were battered with criticism from both Democrats and Republicans over the case of Shi Tao, a reporter accused by Chinese authorities of leaking state secrets abroad and sentenced last April to 10 years in prison.

Shi's crime was to forward to foreign human rights groups an e-mail from Chinese government authorities that directed journalists to avoid coverage of the 15th anniversary of the Chinese army killings of pro-democracy protesters near Tiananmen Square in 1989, said Lantos, a California Democrat.

At Tuesday's hearing, Yang apologized to the committee and to Shi's family, and said Yahoo was doing what it could to help get Shi released.

With members of Shi's family seated behind him among the spectators, Yang told the committee that Yahoo did not know that the personal information sought by the Chinese government involved a political dissident when its China office turned over the data.

"I don't think anyone (with Yahoo) was trying to do anything wrong," Yang said.

Yahoo sold its Yahoo China subsidiary to Chinese Internet company Alibaba.com Ltd in exchange for a 40 percent stake in Alibaba.

Yahoo shares fell 4.6 percent to close at $29.93 in Nasdaq trading on Tuesday. Wall Street analysts said the decline was tied the initial public offering of Alibaba.

Alibaba traded up 193 percent on its first day of trading on the Hong Kong Stock Exchange, valuing it at $25.6 billion. But investors had anticipated Yahoo's stake in Alibaba might be worth even more, leading to the Nasdaq pullback.

HOUSE LEGISLATION

Callahan said Yahoo was looking for ways to structure its operations in other countries to keep data out of the hands of repressive regimes in the future.

But Yang said he still believes in a policy of "engagement" with China. Despite the restrictions, he said, the Internet has made Chinese people more informed.

"It's very important to figure out how to move forward here ...," Yang said.

Yang stopped short of endorsing legislation pending in the House that would bar U.S. Internet companies from cooperating with authorities in China and other repressive regimes.