Former Tencent employees, including Alibaba exec, held in China graft probe

[July 10, 2015]  By Paul Carsten and Arathy S Nair

BEIJING/BENGALURU (Reuters) - Chinese authorities have detained about half a dozen former employees of Tencent Holdings Ltd for alleged corruption and bribery, as well as a current Alibaba Group Holding Ltd executive, the two companies said.

Amid a continuing crackdown on corruption by Chinese President Xi Jinping, Tencent said in a statement on Friday "five or six" people were detained, including two surnamed Zhang and Yue.

"An internal investigation brought to light bribery and corruption among some online video employees ... The police have been notified and we are waiting for the results," the company said in a previous statement.

The alleged wrongdoing occurred when current Alibaba executive Patrick Liu was heading the social networking and entertainment firm's online video unit, according to Tencent.

An Alibaba spokeswoman said late on Thursday that Liu was taken into custody by the Public Security Bureau.

Liu could not be reached for comment.

E-commerce giant Alibaba and Tencent, China's biggest social networking and entertainment firm, are the country's two biggest Internet companies. The two have clashed with increasing frequency as they move away from their core businesses and both push into areas like online entertainment, spending hundreds of millions of dollars on video streaming platforms and music.

"We understand Patrick Liu with our digital entertainment unit has been detained by the authorities," Alibaba spokesman Bob Christie said in an email. "This issue is related to his time at Tencent and has nothing to do with Alibaba."

Liu and other former members of Tencent's video business left the company in 2013 and joined Alibaba later that year.

Tencent and Liu went to court in 2014 over a contract dispute concerning a confidentiality and non-compete agreement which Liu unsuccessfully tried to appeal against, according to official Chinese court records.

Alibaba said on its official Weibo microblog it was "extremely shocked" by the detention of Liu, who is also an executive director at Alibaba Pictures Group Ltd.

Alibaba has arranged for Liu's duties to be handled in his absence to protect Alibaba Pictures' shareholders, will provide him with legal support and that young people make mistakes, the company said.

"Patrick Liu was a former member of Tencent's management, and is suspected of corruption while in his position - this far exceeds the boundaries of making mistakes and violated the company's rules, as well as violating the law," Tencent said in its own Weibo post on Friday.

"Making mistakes can be forgiven, but how can breaking the law be tolerated?"

(Editing by Stephen Coates and Kenneth Maxwell)

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