Two top executives of China's e-commerce giant Alibaba.com, CEO David Wei and COO Elvis Lee, have stepped down from their positions after a probe into their company's dealings exposed over 2,000 users' involvement in fraudulent sales aided from within the company.
The probe was initially launched to discover the reason behind an alarming increase in fraud claims made by customers starting in 2010. Fraudulent sellers would offer sales of consumer electronics with alluring discounts, low minimum purchase requirements and questionable payment options.
Over 1,000 of these sellers would then be labeled as "Gold Supplier" merchants by collaborating Alibaba employees, a sign of trustworthiness and reliability among buyers using the website. These members have since had their accounts terminated.
According to a statement issued by the company, neither Mr. Wei nor Mr. Lee were personally involved in any of the fraudulent deals, but rather decided to resign as an expression of their commitment to the integrity of the company. Nearly 100 employees, however, are suspected of being accomplices in the fraud by intentionally issuing the aforementioned esteemed accounts to sellers and by assisting sellers in getting around the site's verification measures.
As consumer confidence is an integral part of the online shopping appeal, Alibaba.com saw their stock price fall 3.5 percent on Feb 21 before the statement was announced. Jonathan Lu Zhaoxi, CEO of competing e-commerce site Taobao, will replace Mr. Wei as Alibaba's CEO.
