Wall Street Journal | February 21, 2011 | Loretta Chao and Yvonne Lee
BEIJING—Alibaba.com Ltd. said Chief Executive David Wei and Chief Operating Officer Elvis Lee are leaving the company, after an internal investigation found that more than 2,300 sellers on the e-commerce site committed fraud, sometimes with the help of Alibaba sales staff.
The developments raise questions about management oversight at the business-to-business site as it seeks to expand. Alibaba.com’s revenue has grown rapidly as it has added subscribers and products. Alibaba.com’s parent, Alibaba Group also operates China’s largest domestic retail site, Taobao, as well as online payment system Alipay. Alibaba.com is primarily a directory of sellers who offer items in bulk—finished goods as well as parts—to other businesses. Taobao is a site where businesses and individuals sell to consumers.
Alibaba.com said Monday that Mr. Wei, Mr. Lee and other senior managers weren’t involved in the activities that led to buyer complaints, but that the company accepted the executives’ wishes to take responsibility for the “systemic break-down.” Alibaba.com, which is listed on the Hong Kong stock exchange, said Messrs. Wei and Lee weren’t available for comment.
Sellers on Alibaba.com can display Gold Supplier credentials on the site after filing business-verification paperwork to Alibaba for a fee. But Alibaba.com said 100 sales personnel, out of its sales force of about 5,000, as well as supervisors and sales managers were “directly responsible in allowing the fraudsters to evade” the company’s authentication measures.
The result is that some buyers were duped into doing business with fraudulent companies, in some cases paying for goods they didn’t receive.
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