8 members of Chinese media face extortion charges

Eight members of the Chinese media have been detained by police over an alleged scam in which a major business news website and two public relations firms collaborated to extort money from companies in return for favorable coverage on the site.

Zhou Bin, editor-in-chief of the news website 21cbh.com, has been detained for allegedly extorting money from dozens of companies since November 2013. [Photo: Agencies]

The suspects, including CEO Liu Dong and the editor-in-chief Zhou Bin of the news website 21cbh.com, as well as heads of the two PR firms based in Shanghai and the southern metropolis of Shenzhen respectively, allegedly extorted money from dozens of companies since November 2013, the Shanghai Municipal Public Security Office said on September 3.

The list of victims covers many listed companies and well-known businesses from Beijing, Shanghai and Guangdong, that are planning to go public, restructuring or making a business transition.

Having noticed that these companies were particularly susceptible to media coverage, the suspects targeted them in the name of news reporting. After the companies handed over large payments, 21cbh.com helped rebut or conceal negative news reports about them, and released positive stories with exaggerated content.

"Companies which are going public do not want to see 1/8negative 3/8 media reports in view of their own interests, as the procedure of examination and approval would be suspended if there are some 1/8negative 3/8 news reports, and the whole progress of going public would be affected," said Zhou, adding, "it was actually the same as protection money. It was more literary to be called 'paid silence', which means, for example, there would not be any negative reports about an IPO company after money was paid."

If companies declined the solicitation, the website published malicious attacks on them or demanded money to ensure the negative stories did not see the light of the day.

"In fact, it was essentially about shielding companies' negative news, so it was protection. In other cases, you might write some reports revealing negative information about a company which did not establish a cooperative connection with you via a PR firm, then, the company would contact with you through the PR firm for cooperation," Liu said.

" 1/8For example, 3/8 if we wrote some news reports about a listed company, and the company was very anxious to withdraw them. Then, it would find a PR firm to negotiate with us. The prices for erasing these reports were different, it could be half a million yuan, it could be one million. After we signed a contract with a company, the PR firm cooperating with it would monitor relevant media. Once there were some negative reports on your website, no matter whether they were reproduced or original, it would ask our advertising department to withdraw them. The department then would tell us and we would usually do what it wanted us to do," Zhou said.

The police didn't specify the amount the suspects allegedly charged for these services, but said they have made huge personal profits from their actions.

"If there are 200 enterprises going public every year, then 150 of them would cooperate with us in accordance with our targeted ratio of 75 percent. If each of these 150 companies pay 300,000 yuan, then it would be 45 million," said Liu.

The police received reports of the alleged scam from individuals and companies, detaining the eight suspects in a raid on September 3.

Further investigation into the case is under way.

Under regulations set by the State Administration of Press, Publication, Radio, Film and Television, which manages the practices of all journalists in China, press credentials will be revoked in cases of media organizations acting illegally.

21cbh.com is run by Guangdong-based 21st Century Media Co., Ltd., which claims on its website to be "the largest professional media operator in the Chinese financial and business media industry."

The company's publications include 21st Century Business Herald, Money Week and 21st Century Business Review.

Chinese authorities have been stepping up a crackdown on extortion in the media and paid-for news.

They have discovered problems including press cards being issued to people who are not journalists, and news websites being contracted for advertisements by PR agencies.