Yahoo sued over Chinese dissidents fund
Lawsuit alleges trust not properly administered, millions mismanaged
SUNNYVALE — Chinese activists filed a lawsuit Tuesday accusing Yahoo of mismanaging millions of dollars in trust money that should have supported imprisoned Chinese dissidents.
Sunnyvale-based Yahoo declined to address the lawsuit’s allegations, which come as it nears completion of a deal to be acquired by telecommunications giant Verizon.
“We don’t comment on litigation,” said Mike Sefanov, a Yahoo spokesman.
The lawsuit focuses on spending by a trust that Yahoo established in 2007, when it settled a previous lawsuit over its role in providing information to the Chinese Communist Party about political dissidents who also were Yahoo customers. As part of that settlement a decade ago, Yahoo agreed its Yahoo Trust would provide humanitarian assistance to Chinese political dissidents imprisoned for expressing their views online. The company funded the trust with $17.3 million.
Yahoo settled that case with two Chinese dissidents, a business journalist and an editor, who accused the company of being complicit in their arrests for pro-democracy activities online. The settlement came soon after scorching bipartisan criticism of Yahoo in a 2007 congressional hearing about the matter, in
which a Republican representative likened Yahoo’s actions to companies that cooperated with Nazi Germany during World War II, and a Democrat called Yahoo “spineless and irresponsible.”
The new lawsuit accuses Yahoo, the Yahoo Human Rights Fund Trust, two organizations and some former Yahoo executives of failing to properly administer the trust and of instead using the funds to further their own interests.
“A breathtaking majority of the Yahoo Trust — upwards of $13 million — has been systematically and unlawfully depleted in less than 10 years on expenditures having nothing to do with providing humanitarian assistance to imprisoned Chinese dissidents,” the lawsuit claimed.
The Chinese activists named defendants in the lawsuit including Michael Callahan, Yahoo’s former general counsel; Ronald Bell, Yahoo’s former general counsel; and the estate of Harry Wu, who died in 2016 and had been a trustee of the Yahoo trust.
The plaintiffs are residents of China: He Depu, Yang Zili, Li Dawei, Wang Jinbo, Ouyang Yi, Xu Yonghai, Xu Wanping and Yu Ling. All were imprisoned in China for different terms.
The lawsuit claims He Depu, who was in prison from 2003 to 2011 for dissident activities, should have received more of the allegedly mismanaged trust money. “Mr. He received less in humanitarian assistance than he would have but for defendants’ misconduct,” the lawsuit states.
The lawsuit also alleges that Wu, the trustee, concealed trust money from the dissidents and attempted to browbeat the mother of one of the political prisoners.
“When Shi’s mother arrived in Washington, D.C. to collect her son’s portion, Wu demanded that she ‘donate’ $1 million of her son’s $3.2 million share to Wu and Laogai Research Foundation,” an entity that Wu controlled, the lawsuit claims. “Having no legal representation and under intense pressure from Wu, she asked whether $500,000 would be sufficient. Wu responded in a fury, berating her, and causing her great distress.”
The lawsuit alleges Wu also established a $1 million annuity for himself by falsely claiming that he was a cousin to one of the plaintiffs.
“In standing idly by while it knew the Yahoo Human Rights Trust was being squandered, Yahoo abandoned its responsibilities to trust beneficiaries, who have risked their lives by speaking out for political reform in China,” said Times Wang, a Cohen Milstein Sellers & Toll attorney representing the plaintiffs. “We hope this lawsuit creates an opportunity for Yahoo to replenish the fund and make good on its commitment to support basic freedoms as a responsible corporate citizen.”