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Top 10 business scandals

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2010-11-22 10:18

[ Top 10 fancy items in 2010 ]

Editor's note:The world is full of scandals. Here are the 10 top scandals in China's economic community this year, including a prestigious CEO who was accused of faking his career credentials, a dairy tycoon's tricks and products from famous brands found to be faulty or even dangerous to consumers' health.

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1.Complaints over faulty HP laptops

2.Probe ordered into vaccines in Shanxi

3.Four night clubs suspended for using hostesses

4.Shareholder of Hilton Chongqing arrested

5.HK magazine accuses Bawang shampoo of containing cancer-causing chemical

6.Former Microsoft chief accused of faking his academic credentials

7.Dairy tycoon arrested for illegally collecting public funds

8.Secret recalls of problematic oil

9.Airline pilots have fake credentials

10.Mengniu in smear scandal

1.Complaints over faulty HP laptops

Chinese characters for the Hewlett-Packard logo on the steps of an HP PC franchise store in Guangdong province. HP is expected to face a series of lawsuits this year from Chinese consumers over alleged defective notebook computers. [Photo/Agencies]

As of March 10, on a nonprofit website in China, more than 1,400 consumers had expressed their willingness to take part in a group complaint against Hewlett-Packard Co (HP) over faulty laptop computers and more than 80 lawyers said they would like to help in the case.

The complaints centered on video cards that overheated and caused the laptop to malfunction.

The complaints asked a quality watchdog organization to launch an investigation into HP laptops, hoping the government will order the company to have the faulty laptops returned or replaced with new ones and provide compensation. It was also suggested that government issue orders to launch a recall on all faulty laptops.

Later HP issued an apology on March 15 and offered an extension of warranty periods for some laptop models, but HP did not respond to consumers' request for a recall of the faulty laptops.

2.Probe ordered into vaccines in Shanxi

Parents of the children who suffered from the vaccine scandal in North China’s Shanxi province protested in front of the Ministry of Health in Beijing, on June 25, 2010. [Photo/CFP]

The probe into a vaccine scandal in North China's Shanxi province showed violation of rules by the provincial Center for Disease Control and Prevention (CDC) and the vaccine producer, an official said on March 22.

Ju Xianhua, deputy secretary general of the provincial government, said at a press conference that the former director of the provincial CDC, Li Wenyuan, violated rules while cooperating with the vaccine producer, Beijing Huawei Company, and was blamed for embezzling 270,000 yuan from the company's 500,000 yuan safety guarantee deposit.

Results of the 15-day official investigation showed that faulty vaccines did not cause the deaths and illnesses of nearly 100 children in Shanxi province, the Ministry of Health (MOH) said on April 6.

On March 17, the Beijing based China Economic Times reported, citing Chen Tao'an, a whistleblower who worked with the Shanxi CDC in 2007, that nearly 100 children died or fell ill in Shanxi after taking shots of the vaccine.

3.Four night clubs suspended for using hostesses

Hostesses providing paid services wait to be questioned by police in the hall of a night club in Beijing's Chaoyang district on May 11, 2010. [Photo/Beijing Times, courtesy of police]

The doors of four of Beijing's high-end nightclubs remain closed despite the end of a six-month suspension of their business for prostitution on Nov 11.

Police in Beijing's Chaoyang district on May 11 discovered 557 hostesses providing paid services, which is against the law, in four luxury night clubs, and suspended the clubs' business for six months.

Passion Club, Comfort International, Flower City and Regal Club made the headlines when police raided them in April.

In a bid to crack down on prostitution, Chaoyang police have checked more than 400 singing halls, foot and body massage centers and hair salons without licenses since April 11.

4.Shareholder of Hilton Chongqing arrested

Peng Zhimin, a real estate developer in Chongqing, leaves a fingerprint to sign for his testimony after being arrested by Chongqing police on July 23. He is charged with 13 offences, including managing a mafia-style organization, organizing prostitution, assault, illegal occupation of farmland and bribery. [China News Service]

The police in Chongqing in Southwest China arrested 46 people for their alleged involvement in a mafia-style gang - including two local government officials and a major shareholder of the Hilton Chongqing that had been shut down in June over prostitution.

Peng Zhimin, a real estate developer in Chongqing, is the boss of Qinglong Property Development, which has a 53 percent stake in the Hilton Chongqing.

Peng, 47, faces 13 charges, including managing a mafia-style organization, bribery, prostitution, assault and the embezzlement of farmland, according to a statement from the municipal public security bureau.

He had been detained after the police closed down the Hilton on June 21 over allegations that it had provided shelter for Peng's underworld gang, which ran a prostitution ring from the hotel.

5.HK magazine accuses Bawang shampoo of containing cancer-causing chemical

Jackie Chan serves as a representative for BaWang products, as seen in this store display. [Photo/ China Daily]

Samples of BaWang's anti-hair-loss formula shampoo and its Royal Wind brand were found to contain the cancer-causing substance dioxane, Hong Kong-based Next Magazine reported on July 14, citing test results by Swiss inspection and analysis company SGS.

Shares of the Hong Kong-listed company immediately fell as much as 18 percent and the stock was later suspended from trading.

The State Food and Drug Administration (SFDA), China's food and drug watchdog, immediately investigated and announced on July 16 that shampoos made by Bawang were safe to use as tests showed the levels 1,4-dioxane posed no danger to users.

BaWang later filed a complaint against Next Magazine Publishing Ltd over the report that caused the firm unspecified damages.

6.Former Microsoft chief accused of faking his academic credentials

Former president of Microsoft China Tang Jun on July 6 sought to dispel a rumor that he faked his academic credentials in the United States after remaining silent over the matter for the past five days.

"I've never said I graduated from the California Institute of Technology (CIT). I only said I had done some research there," said Tang, the current president and CEO of the New Huadu Industrial Group. "Instead, I got my doctors degree at the California-based Pacific Western University," he said.

Tang's remarks came after Fang Zhouzi, who is known as a "science cop" for battling against pseudoscience and academic misconduct, accused Tang of fabricating a doctoral degree from CIT, the ownership of two patents and entrepreneurial accomplishments early in his career in the US.

Fang continued his attack on July 7 by saying that Tang was "lying to the entire nation" when he tried to defend himself.

7.Dairy tycoon arrested for illegally collecting public funds

Chinese procuratorate approved the arrest of Li Tuchun, founder of leading Chinese dairy beverage producer "Taizinai" or "Prince Dairy", for illegally collecting public funds, a government spokesman said on July 27.

The arrest of three others of the top management had also been approved, said a spokesman of Zhuzhou city of South China's Hunan province, where the Taizinai Group is based.

Initial investigations since early June showed that the company had illegally taken 130 million yuan ($19 million) in public funds by last December.

8.Secret recalls of problematic oil

A worker takes off Jinhao camellia oil from the shelves in a supermarket in Beijing on Sept 2, 2010. [Photo/CFP]

Local health authorities on Aug 31 admitted waiting for five months before announcing that secret recalls had been ordered for camellia oil by Jinhao, a well-known edible oil maker based in Central China's Hunan province, after the oil was found to have contained excessive carcinogens

The Century Weekly, a Chinese magazine, reported on Aug 30 that Jinhao twice recalled the problematic oil without informing consumers or the media.

An official with the provincial bureau of quality and technical supervision confirmed that in March the bureau found excessive amounts of harmful elements, known as benzo(a)pyrene (BaP), in a sample of Jinhao camellia oil.

But the official did not explain why the bureau only demanded Jinhao recall the oil, but did not publicize the result of the testing in March.

9.Airline pilots have fake credentials

A flight of Shenzhen Airlines is seen on Sept 15, 2010. [Photo/CFP]

Civil aviation officials have found that more than 200 pilots falsified their flying histories, with more than half of them working for the parent company of an airline involved in China's worst plane crash in several years, a report said on Sept 6, citing a source with the civil aviation administration.

The results of investigations showed that in 2008-2009, airlines desperate for staff were hiring pilots whose resumes had been faked, the Shanghai-based newspaper China Business News reported.

The report also noted that Shenzhen Airlines reportedly had 103 of the pilots with faked work histories on its payroll.

A spokesperson with the Civil Aviation Administration of China (CAAC) confirmed the figure of more than 200 pilots who falsified their flying histories, adding that all those found with fake resumes have been punished accordingly.

10.Mengniu in smear scandal

This Sept 16, 2010 file photo shows milk packages made by Mengniu Dairy (R) and Yili Group at a supermarket in Haikou, capital of South China's Hainan province. [Photo/Xinhua]

Mengniu Dairy Co, China's largest dairy company by market value, allegedly plotted online attacks with the assistance of a public relations company against its competitors, Yili Group and Synutra International.

Rumors circulated that Mengniu made up a story that spread online in July, which claimed Yili's infant formula contained fish oil that could lead to premature sexual development.

Mengniu issued a letter on Oct 22 clarifying that the incident plotted by An Yong, Mengniu's division manager, was an individual act and was not endorsed by the company.

Two members of management at Mengniu and members of staff at its partner BossePR have been detained.

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Specials

Top 10 business scandals

By Qiang Xiaoji (chinadaily.com.cn) Updated: 2010-11-22 10:18

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2010-11-22 10:18