By Bill Powell, contributor
For several years now, the Internet firm Alibaba-Taobao has been one of the most prominent Chinese companies on the planet—thanks both to its success and to its brash, charismatic founder and chairman, "Jack O' (Yun) Ma, who started the online commerce company in 1999. Its business-to-business platform, Alibaba.com, went public on Hong Kong's stock exchange in 2007 and raised $1.7 billion—at the time the second biggest Internet IPO ever, behind only Google (GOOG). Its online consumer sales company, Taobao, went mano-a-mano with eBay (EBAY) and effectively ran the global giant out of China a few years ago.
Yesterday for the first time, Alibaba hit a big public bump in the road: It reported that 2,326 high volume sellers who pay a fee to the company to peddle their wares on the site – "gold suppliers," as they're called—defrauded customers over the course of two years, with the assistance of nearly 100 Alibaba.com employees. Ma said the sellers were organized "fraudsters." As a result of the scandal, Alibaba.com CEO David Wei, and his deputy, COO Elvis Lee, both resigned yesterday. Neither, the company stressed, are implicated in the fraud; both were falling on their swords to accept responsibility. (Japanese style corporate accountability comes to China.) More
|GM raising Corvette prices|
|Boeing reports wing cracks on Dreamliners|
|Bitcoin matters. Ignore the media circus.|
|Albertsons to merge with Safeway|
|China to fight pollution with drones|