Reported Scandal in China Suggests Baidu`s Weak Corporate Governance

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Reported Scandal in China Suggests Baidu`s Weak Corporate Governance

News regarding a Baidu (BIDU) executive and his potentially undisclosed business relationship and investment in certain parties related to Baidu is making the rounds in China, but has not yet been widely disseminated here in the United States.

Multiple news sources in China have reported that Baidu’s VP, Li Mingyuan, “had the whistle blown” on him regarding “not reporting to Baidu that an external company that he invested in has business relationship with Baidu”, and that he has already admitted to wrongdoing and decided to resign. Baidu immediately accepted his resignation. According to the introduction of the article, Li Mingyuan became a member of Baidu’s highest decision-making committee in July 2014.

Here are the news stories from Tencent and Sina Finance:

Below is the main content (paraphrased) that Baidu’s Professional Ethical Committee reportedly sent to its employees, as shown in the news referenced above:

“æŽæ˜Žè¿œåœ¨å‚与公司某收购项目中,与被收购公司负责人有私下巨é¢ç»æµŽå¾€æ¥ï¼›åœ¨å…¶æ‰€ç®¡ç†çš„业务范围内,与某游戏合作伙伴的负责人有私下巨é¢ç»æµŽå¾€æ¥ã€‚同时,æŽæ˜Žè¿œä¸ªäººæŠ•èµ„参股的外部公司与百度有业务关联,未按公司制度报备。

“In an acquisition involved, [Vice President] Li Mingyuan has tremendous amount of economic relationship with the person in charge of the company acquired [by Baidu]; In [Baidu’s] business under his management, [Li Mingyuan] has tremendous amount of economic relationship with the person in charge of a gaming company partner [of Baidu]. Also Li Mingyuan did not report to Baidu that an external company that he invested in has business relationship with Baidu. “

Additionally, both Macquarie and Credit Suisse downgraded Baidu to Neutral after the company reported its Q3 2016 financial results, according to Benzinga.

We will continue to follow this story as it develops in China since the U.S. mainstream media seems to be unaware of this issue.


Disclosure: Short BIDU at time of note

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By | 2019-05-02T10:36:39-04:00 November 4th, 2016|GeoTeam Research, In Depth Research, premium, Sector News, Spotlight Research|0 Comments

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