Two former China Mobile (NYSE:CHL) executives were sentenced for taking $67 million in bribes and kickbacks when Australian firm Telstra (ASX:TLS) acquired two ringtone and music download businesses, a deal worth $194 million in 2007.
One of the former executives, Ye Bing, has been sentenced to death for taking $50 million in bribes, while the other, Ma Li, has been sentenced to life in prison for taking $17 million in bribes, Caixin, a Chinese financial news outlet, reported on Monday. Sharp Point and China M, the two businesses acquired, provide ring tone and music download, respectively.
The Chinese companies were enjoying booming business at the time, largely due to preferential treatment given to them by the China Mobile executives, who met with Telstra and assured the Australian firm of the potential of Sharp Point and China M. It was later uncovered, however, that both men were being paid to praise the Chinese companies. Telstra is not accused of wrongdoing in the case.
When the two executives came under investigation -- amid China's campaign to crack down on corruption -- and ceased to provide preferential treatment for Sharp Point and China M, business at each company tanked.
“We are concerned about any allegations of impropriety against the companies and we take governance and compliance extremely seriously,” a Telstra spokeswoman said, according to the Financial Review. “We exercised due diligence in the transaction.
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“The China M and Sharp Point businesses have both been divested as they were underperforming,” she added.