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China has sentenced a former China Mobile executive to death for taking bribes when Telstra acquired two Chinese companies in 2007. Telstra has lost its investment.

In 2007 Telstra acquired a Chinese ringtone business called Sharp Point and a download business called China M for a total of $302 million.

A China Mobile executive involved in the deal, Ye Bing, has been sentenced to death for taking US$50 million in bribes when facilitating the deal. Another, Ma Li, has been sentenced to life in prison for taking a US$17 million bribe.

It was not Telstra that paid the bribes, and the company is not directly involved, but appears to have lost its money.

Sharp Point and China M were doing well at the time, largely because the two China Mobile executives were giving them preferential treatment. They also assured Telstra of the companies’ potential.

But it later transpired that they were being paid to do so, and that the two companies were not in fact doing nearly so well as it appeared.

“We are concerned about any allegations of impropriety against the companies and we take governance and compliance extremely seriously,” a Telstra spokeswoman told the Australian Financial Review. “We exercised due diligence in the transaction.

“The China M and Sharp Point businesses have both been divested as they were underperforming.” Little wonder.

“When you’ve got a chief executive like David Thodey and a chairman like Catherine Livingstone and the board that we’ve got, company ethics is absolutely the first priority,” said Telstra’s head of corporate affairs Tony Warren. “In this case we did exactly the right thing and we will continue to do that.”

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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