Tencent executive detained by China for links to corruption case

An executive of Tencent Holdings Ltd., China’s most valuable listed company, has been detained by Chinese authorities in connection with an investigation into a high-profile corruption case involving one of the former top officials law enforcement, people familiar with the matter. mentionned.

Zhang Feng has been under investigation by the Chinese Antigraft Inspector since early last year for alleged unauthorized sharing of personal data collected by Tencent’s social media app WeChat, said. people. They said Mr. Zhang was suspected of handing the WeChat data to former Vice Public Security Minister Sun Lijun, who is currently investigating by Beijing for undisclosed violations of Communist Party rules.

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Investigators are examining what kind of data Mr. Zhang could have shared with Mr. Sun and what Mr. Sun could have done with it, people said.

Hong Kong-listed Tencent, which has a market capitalization of around $ 900 billion, confirmed on Thursday that Mr. Zhang was under investigation. The case “concerns allegations of personal corruption and has nothing to do with WeChat or Weixin,” a spokesperson said in a statement to the Wall Street Journal. Weixin is WeChat’s sister app for the Chinese market.

Mr. Zhang was referred to as Tencent’s vice president in a statement released by the municipal government of Zhangjiakou, a city near Beijing, in which he was described as having met with the city’s mayor in October 2018.

Tencent said that Mr. Zhang had never held a senior management position in the company or a management position.

Mr. Zhang’s whereabouts could not be determined now. He could not be reached for comment. Mr. Sun did not respond to a request for comment sent by Chinese antigraft inspectors – the Central Commission for Discipline Inspection – and the State Council Information Office.

WHAT IS TENCENT?

Mr. Zhang’s case shows how China’s biggest tech companies can get tangled up in political battles at the highest levels of the Chinese Communist Party. Companies like Tencent have access to coveted data, as well as insight into the users who provide it. Beijing is increasingly concerned that tech companies could misuse or share this data inappropriately, even as authorities sometimes demand access for their own purposes.

Anti-corruption inspectors have been quiet about Mr. Sun’s alleged breaches, saying in April he was suspected of breaking the law. He is one of the most senior security officials investigated since Chinese leader Xi Jinping launched a massive anti-corruption campaign against law enforcement last year.

Authorities did not confirm that Mr. Zhang was under investigation.

As the investigation into Mr. Zhang unfolds, Pony Ma, the founder and CEO of the billionaire Tencent, has not been seen publicly in mainland China or in person at major public events. He spent most of his time in Hong Kong, people familiar with the matter said.

Mr. Ma has not been charged with any wrongdoing. He did not respond to requests for comment. The Chinese State Council’s information office and the Central Disciplinary Inspection Commission did not respond to requests for comment.

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Mr. Zhang joined Tencent in 2018, according to people familiar with the matter. Born in 1968, he has spent most of his career in a department of the Communist Party’s Central Committee, overseeing the appointments of senior party officials, according to stock filings from a listed state-owned company in Shenzhen where he worked. before moving to Tencent.

As a Tencent executive responsible for government affairs, Mr. Zhang met with Chinese government officials and was responsible for managing the company’s relationship with government departments in Beijing, according to one of the people.

Tencent WeChat’s mobile app is the predominant social media platform in China. Its chat and online payment functions make it an indispensable part of the daily life of hundreds of millions of Chinese people.

Over the years, Tencent has collected a wealth of data through processing the chat conversations and financial transactions of its 1.2 billion monthly active users, most of them in China. This has made WeChat a powerful monitoring tool for the Chinese government, which regulates Tencent and regularly suppresses dissenting opinions on WeChat, the Journal reported.

More recently, however, Chinese authorities have become increasingly concerned that the data collection systems of Tencent and other tech giants are giving them unique insight and power over Chinese society, calling into question the Communist Party’s desire to monopolize this information. In recent weeks, China has released new antitrust rules targeting internet platforms, which analysts say is in part driven by Beijing’s attempt to regain control of users’ personal data.

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Mr. Ma’s lack of public appearances – following China’s recent crackdown on another billionaire entrepreneur, Jack Ma, who is unrelated to Pony Ma – has raised concerns among current and former employees of Tencent as to why the company founder was not seen at events.

The last publicly documented in-person sighting in mainland China of Mr. Ma, who also bears his Chinese name, Ma Huateng, took place in August 2019 in Shanghai during the World Artificial Intelligence Conference.

Mr. Ma has only made virtual appearances at Tencent’s company-wide year-end gatherings since December 2019 – a break from his usual practice of attending such events in person. The employees were informed that Mr. Ma was recovering from a back injury. Mr. Ma, a representative of the National People’s Congress, was absent from legislative work last year in May, citing health reasons.

As face-to-face meetings largely resumed in mainland China in mid-2020, Mr. Ma missed an October ceremony marking the 40th anniversary of China’s first Special Economic Zone in Shenzhen, where Tencent is based.

Meanwhile, Mr. Ma, 49, participated – at least via audio – in quarterly earnings calls. In November, he gave an audio speech at a philanthropic event.

Mr. Ma’s sub-par profile had little impact on the operation of Tencent, whose revenue and share price hit all-time highs during the pandemic as home-confined users flocked to its video games and digital services.

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Tencent is now China’s most valuable publicly traded company, after overtaking e-commerce giant Alibaba Group Holding Ltd. in terms of market capitalization most recently in December.