Meituan corruption probe just the “tip of the iceberg” of corporate corruption

2 min read

China’s hit anti-corruption TV drama In the Name of the People has just come to an end, but the cleanup campaigns for Chinese internet giants is continuing.

Meituan-Dianping, the acknowledged O2O giant in China, revealed ten graft cases in the group in an internal email, local media is reporting. A dozen employees and merchants were involved in charges of receiving bribes from merchants, deceiving merchants, stealing personal information of clients, and order scalping, whereby merchants inflate their sales through fake orders to cheat for platform subsidies. The suspected criminals have been handed over to the judiciary authorities for further investigation and trial.

The company says it will adopt a zero tolerance approach for those who make fake orders or conduct online frauds no matter they are company employees or merchants.

This is not the first time Meituan has taken action against illegal behavior. According to the internal statement, the company transferred 30 employees and nearly 200 illegal merchants in 2016 to relevant authorities.

The cases Meituan revealed this time include specific examples from employees soliciting kickbacks from merchants to deliveryman making a profit by asking customers to scan fake QR codes. While it is unclear how long this has been happening, what is clear is that corruption has infected all the core businesses of the company from hotel booking to food delivery.

Meituan’s food delivery business is where the corruption is most severe. This is partly caused by the highly subsidized business model of this sector. Similarly, subsidy fraud is also affecting ride-hailing, another subsidy boosted industry in the country.

Meituan’s announcement has brought the phenomenon of internal corruption in internet companies to the spotlight, but as far as Meituan’s cases are concerned, this kind of practice is something commonplace in the days of click farming, rampant selling of personal information, and empty product scalping, among others.

The severity of the problem has encouraged many companies to publicly disclose corruption cases before they were found out by investigators.

After revealing ten graft cases in November last year, JD launched a second anti-corruption campaign with the announcement of six corruption cases this week, firing eight people who have been taking bribes. Alibaba, Tencent, and Baidu have all made their moves through setting up dedicated departments for the clean up internal corruptions. Baidu’s former vice president Li Mingyuan has resigned amid a reported scandal of undisclosed transactions and ethical violations.

Although only bigwigs are involved in this battle now, the joint efforts and determination would foster a healthier industrial environment.

Cleaning up corruption with iron fist measures are sure an important component for an anti-corruption drive. However, like in China’s governmental anti-graft movements, the key problem for these tech behemoths lies in how to establish effective prevention mechanisms to make sure this doesn’t happen in the first place.