Journalists who worked for a business news Web site under investigation in Shanghai have described a scheme of extorting Chinese companies, which were pressed to pay in return for the production of flattering articles or the burying of damaging ones, according to reports in state-run news media.
The accusations against the Web site, 21st Century Net, followed the arrests of eight people last week in the case. On China Central Television (CCTV) on Thursday, the president of the Web site and several arrested reporters described how they had colluded with public relations firms to identify vulnerable Chinese companies.
The interviews, in which the arrested journalists wore orange T-shirts, appeared to be more of the paraded confessions that have become a staple of law enforcement in China.
China’s corporate landscape is pitted with scandals involving corruption, nepotism, bribery and false company results.
The 21st Century Net journalists’ accounts shown on CCTV added vivid detail to claims that some members of China’s media have become a part of the problem by turning self-censorship and skewed reporting into a source of revenue.
The Web site’s president and the reporters said the targets were presented with a proposition: Pay up in the form of advertising orders or become the subjects of damning reports that could unsettle investors and deter regulators from approving plans for initial public offerings (IPO) or restructuring.
“Using negative reports to extort businesses is a hidden rule of the industry,” Xinhua new agency paraphrased one of the arrested reporters, Wang Zhuoming (王卓明), as saying. “This was collective behavior, and companies all did it, from top to bottom.”
The legal affairs office for the Web site and newspaper declined to comment on Thursday. Last week, the Web site issued a statement saying it would cooperate with the police investigation.
Also among those arrested on Sept. 3 were staff members of two public relations companies in Shanghai.
In the broadcast, the arrested journalists did not appear to be speaking freely as they contritely cooperated with the interviewer. Suspects in China often have no access to lawyers until nearly the time of their trials, and such public confessions have become a regular occurrence.
“In the Chinese financial media, there’s usually no firewall between the business side and the editorial side,” Zhao Jing (趙靜), a journalist who writes regularly for Caixin, a weekly business magazine based in Beijing, said in a telephone interview.
Zhao, better known by his pen name, Michael Anti, said Caixin had safeguards to deter such practices.
The 21st Century Net Web site operates under the 21st Century Business Herald, a broadsheet based in the southern city of Guangzhou. The newspaper is in turn operated by Nanfang Media Group, a state-owned company.
The Web site was spun off into a separately managed unit in 2010. The Herald and the Web site must, like all other Chinese news media, survive in fickle conditions that combine heavy state censorship and predominant state ownership with intense commercial competition for audiences and advertising.
According to the Web site’s journalists, however, habitual self-censorship and the pressure for revenue turned into a business opportunity. With the help of the two public relations firms in Shanghai, the editors and journalists identified Chinese companies hoping to list on local stock exchanges or make other changes requiring regulatory approval, Liu Dong (劉東), the president of the Web site, said on CCTV.
The Web site then put pressure on the companies to pay “protection money,” often in the form of advertising orders of 200,000 to 300,000 yuan (US$32,500 to US$49,000) in return for furnishing positive stories, abandoning unpublished negative reports or removing negative articles already published.
“Companies preparing to list in IPOs were treated like a fat piece of meat or a cake to be carved up,” said Tao Kai, an executive director of one of the public relations firms that acted as an intermediary in the deals.
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