Alibaba executives resign after fraud probe

Chinese e-commerce giant Alibaba said Monday its chief executive officer and chief operating officer had resigned after a probe found many suppliers had defrauded online customers.

David Wei and Elvis Lee resigned as CEO and COO respectively, accepting responsibility after 1,107 of its suppliers were terminated for using the site to cheat buyers in 2010, the company said in a statement to media organizations.

"Alibaba will definitely not become a money machine, and any behavior that runs against the company's values will not be tolerated," the notice said.

"Integrity is the foundation of values that Alibaba cherishes most, which include the integrity of the staff and a honest and safe online trading platform," said founder and non-executive chairman Jack Ma in a letter to his employees.

The company had received complaints about fraudulent trading since 2009, and such cases continued to be reported despite Alibaba's efforts including shutting down suspected suppliers, according to the notice.

Alibaba launched an investigation more than a month ago, which showed that 1,219 suppliers in 2009 and 1,107 suppliers in 2010, accounting for 1.1 percent and 0.8 percent of its total suppliers in the two years respectively, had acted fraudulently.

Their accounts have been closed and judicial investigations started.

The statement said nearly 100 sales representatives who had allegedly collaborated with or failed to properly assess the defrauding suppliers had been fired or received other penalties.

Jonathan Lu, 41, will take over as CEO of Alibaba.com Ltd. which is listed in Hong Kong and based in Hangzhou, capital of east China's Zhejiang Province.