China arrests couple for trafficking in private information

Chinese authorities made it official: British risk consultant Peter Humphrey and his wife, Yu Yingzeng, were formally arrested for illegally obtaining and selling personal information about Chinese citizens. The government's confirmation comes as a Chinese corruption probe expands through the pharma industry.

On state television, a man identified as Humphrey appeared--with his face blurred, media reports said--and admitted that he had stepped over the line in gathering intelligence for his clients. "I sometimes used illegal means to obtain personal information," the man said. "I very much regret this and apologize to the Chinese government."

As the state news service Xinhua reports, police seized 500 investigative reports prepared by the couple's firm, ChinaWhys, for clients. More than 10 infringed on Chinese citizens' privacy rights, Xinhua's police sources said. The information included home addresses, names of family members, real estate documents, and records indicating when and where subjects left the country. According to authorities, Humphrey and Yu sometimes bought the information from their sources; they went on to sell their findings to lawyers, banks and multinational companies, authorities said.

Chinese police didn't say whether the multinational companies include any drugmakers. Sources told The Wall Street Journal's China blog that Humphrey's company did work for GlaxoSmithKline ($GSK), which is accused of paying up to $490 million in bribes to doctors and healthcare officials. The drugmaker told Bloomberg last week that Humphrey was never an employee but didn't say whether the company had been a ChinaWhys client.

Humphrey and his wife were originally detained on July 16, as the GlaxoSmithKline investigation intensified. Soon after, officials visited a series of drugmakers, including Sanofi ($SNY), UCB, Lundbeck, Novo Nordisk ($NVO) and Eli Lilly ($LLY). Two AstraZeneca ($AZN) employees were brought in for questioning. It's unclear whether these visits were directly related to the corruption probe. Since then, several whistleblowers took bribery allegations to Chinese media, accusing Sanofi, Novartis ($NVS) and Lilly. Authorities said they would investigate the allegations against Sanofi but have not announced official probes at Novartis or Lilly. All three companies say they are investigating the accusations.

The industry probe follows several years of big investments in China, as foreign drugmakers sought to tap the fast-growing market. While laying off employees in the U.S. and Europe, several Big Pharma companies have hired hundreds in China, many of them sales reps.

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