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Alibaba co-founder responses to fraud scandal

posted 24 Feb 2011, 04:52 by Mpelembe   [ updated 24 Feb 2011, 04:55 ]
Alibaba Co-founder Response- Alibaba co-founder responses to fraud scandal

China Central Television - In the wake of a fraud scandal involving some suppliers, Chinese e-commerce giant Alibaba's CEO and COO announced their resignation and another high-ranking administrator was degraded on Monday.

And, following the shocking administrative reshuffle, the company suspended, on the same day, the service provided by 1107 Chinese suppliers.

Jiang Fang, co-founder of Alibaba said: "Not even in terms of credit standing, whoever in our team does not hold the value that puts customers first and goes just after personal benefit, has to leave."

"In all the cases we are now investigating, no customer has been found to use payment ensured by a third party. They just believed the sellers' promise of an extremely low price of the products and a, attractively high profit, which eventually led to a great loss on the customer." Jiang said.

"We've made increased efforts in filtrating the aptitude of our clients and in improving the technical support on monitoring system so that we can prevent fraud and aviod loss to customers."

According to Alibaba's co-founder Jiang Fang, the investigation shows that 100 salesmen and sales managers out of the 5,000-member sales department should be resopnsible for the fraud involving many of the company's suppliers.

Alibaba confirmed David Wei and Elvis Lee resigned as CEO and COO respectively after more than 1,000 of Alibaba's suppliers were caught using the website to cheat buyers in 2010.

According to an notice of the company, Alibaba launched an investigation more than a month ago, which showed about 1,200 suppliers in 2009 and 1,100 suppliers in 2010 had acted fraudulently.

Their accounts have been closed and judicial investigations have started.

In addition, the statement said nearly 100 sales representatives of the company had allegedly collaborated with or failed to properly assess the defrauding suppliers. They have been fired or received other penalties.

Jack Ma, founder and non-executive chairman of Alibaba, said: "Tolerance of behaviors that broke the bottom line of the company's values is a crime against honest suppliers and employees, and we must take actions to safeguard Alibaba's values."

Ma said he hopes the incident could serve as an example to other companies if they encounter similar problems.

The company says that 41-year-old Jonathan Lu, who is CEO of, will take over as CEO of

TAG Alibaba listed in Hong Kong, is based in Hangzhou, capital of east China's Zhejiang Province.

Founded in 1998, Alibaba has become the largest online company in China and also the world largest e-commerce company.

A just third party monitoring system is badly needed not only for accepting customer's request, but also for checking up the criterion of the internet business portal like Alibaba. Development of E-business in China was largely relying on the construction of trust. As E-business is the largest beneficiary commercial trust, it should also act as the leader in rebuilding a trust system.

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