Activists sue Yahoo over mismanaged fund

WASHINGTON • A group of Chinese political activists has filed a lawsuit in the US federal court against Yahoo, saying that the firm failed to properly oversee a US$17 million (S$24 million) fund it created a decade ago to help Chinese writers, democracy advocates and human rights lawyers persecuted for standing up to the Chinese government.

The lawsuit accuses Yahoo senior executives of turning a blind eye as the fund's manager, Mr Harry Wu, illegally spent millions of dollars on high-end real estate, inflated staff salaries and a museum documenting the history of forced labour camps in China.

The lawsuit said Mr Wu, a veteran Chinese dissident who died at age 79 in April last year, spent less than 4 per cent of the money on humanitarian aid. The lawsuit demands that Yahoo replenish the trust.

Yahoo spokesman Suzanne Philion declined to comment, saying it does not discuss litigation.

The lawsuit is a reminder of one of the more ignominious episodes in Yahoo's history. In 2007, the company belatedly acknowledged that it had provided Chinese authorities with the identities of subscribers in China whose e-mail had angered the government. The disclosures led to two activists being sentenced to 10 years in jail.

In a public rebuke, a congressional panel criticised Yahoo's chief executive at the time, Mr Jerry Yang, and accused him of lying about the company's cooperation with Chinese security officials.

To settle litigation against the firm, Mr Yang gave US$3.2 million to relatives of each of the two jailed dissidents. And it also provided more than US$17 million for the creation of a humanitarian fund dedicated to helping Chinese activists and their families.

Mr Wu spent much of the money on his organisation, the Laogai Research Foundation, which had worked to expose China's exploitative use of prison labour.

According to the foundation's filings, only US$700,000 was distributed to dissidents or their families, many of whom were forced into poverty by the government.

Of the original US$17 million, less than US$3 million is thought to remain.

NYTIMES

A version of this article appeared in the print edition of The Straits Times on April 13, 2017, with the headline 'Activists sue Yahoo over mismanaged fund'. Print Edition | Subscribe