Top two Alibaba execs resign over fraud allegations

China’s largest e-commerce group, Alibaba.com, has confirmed that two of its top executives, Chief Executive David Wei, and Chief Operating Officer, Elvis Lee, have resigned following a probe that uncovered over 2 000 cases of fraud.

The Guardian reports that “an internal investigation showed sales staff ‘intentionally or negligently’ allowed more than 2 300 fraudsters to set up verified stores.” While neither of the execs were directly implicated in the probe, “it took senior management at the online marketplace at least nine months to take action”, a delay which has resulted in the resignations of the two executives.

Alibaba has a workforce of roughly 14 000 workers. Only 100 of them were involved in the fraud which began in 2009. The report concluded that “some supervisors and sales managers had either intentionally or negligently allowed the creation of fraudulent ‘storefronts’ by letting suppliers evade authentication and verification measures”, and “most purchases involved offerings of popular consumer electronics at bargain prices with low required minimum orders”.

The Huffington Post reports that “Alibaba, based in the eastern Chinese city of Hangzhou, claims more than 56-million registered users in more than 240 countries and regions.” It was setup by Jack Ma, an entreprenuneur and former school teacher who is quoted as saying “One of our most important values is integrity. That means the integrity of our employees and the integrity of our online marketplaces as trusted and safe places for our small business customers”.

The average amount of fraud in each case was only around US$1 200, but the company has paid out over US$1.7-million from a fund that was set up to redistribute buyers involved in unauthorised transactions.