Democratic leader to Yahoo CEO: China policy is 'spineless'

Jerry Yang and lawyer are ripped by both parties over allegedly withholding key information about role in cases leading to imprisonment of Chinese online dissidents.

Members of Congress on Tuesday showed almost no mercy for top Yahoo executives attempting to smooth over accusations about the company's role in the imprisonment of Chinese dissident journalists.

Yahoo Chief Executive Jerry Yang and General Counsel Michael Callahan endured nearly four hours of tongue-lashing from Democrats and Republicans alike on the U.S. House of Representatives Foreign Affairs Committee.

The subject of the hearing: Allegations that Callahan provided "false information" to the panel last year regarding a case that landed 37-year-old Shi Tao a 10-year prison sentence. A related case involving an online writer named Wang Xiaoning also came up at the event. ( For more, click here for our live coverage of the hearing. )

The company executives offered repeated apologies to the committee, both for failing to update the politicians with details about their subsidiary's cooperation with the Chinese government and for the suffering faced by families of the imprisoned dissidents. They also professed the Internet portal's commitment to human rights and continued to defend their decision to keep their Chinese operations alive, despite the censorship-happy whims of the Communist power.

In the end, politicians displayed virtually no sympathy for Yahoo's plight. Lantos called on Yahoo to account for what he called "spineless and irresponsible actions" in its Chinese operations.

"Look into your own soul, and see the damage you have done to an innocent human being and his family," Rep. Tom Lantos (D-Calif.), the panel's chairman, told them at the hearing's close. "It will make no difference to the committee what you do, but it will make you better human beings, if you recognize your own responsibility for the enormous damage your policies have created."

At issue are statements Callahan made under oath to the same committee alongside Microsoft, Google, and Cisco Systems representatives during a widely covered hearing about global Internet censorship in February 2006.

Specifically, Callahan told the committee that he didn't have any knowledge of the facts surrounding why Chinese authorities approached Yahoo China with a request for identifying information about Shi, who was later convicted of leaking "state secrets"--namely, forwarding an e-mail detailing press suppression to an overseas advocacy group--in violation of Chinese law.

But Callahan has acknowledged that he later found out that the legal order did, in fact, specify that Shi was suspected of leaking "state secrets." He apologized to the committee on Tuesday for the "confusion" his earlier statements may have sparked among politicians. He added that he sincerely regretted not updating the committee with that information when, in October of last year, the details of the Chinese government order were finally brought to his attention.

"This was inexcusably negligent behavior at best and deliberately deceptive behavior at worst," regardless of the reason, said Lantos, who repeated that declaration twice for emphasis.

The Chinese government, he added, is notorious for evoking the "state secrets" claim to back a "phony but devastating legal case against an innocent person who shares our values in an open and free society." He made it clear that Yahoo should have known better.

Most politicians said they weren't prepared to go so far as to accuse Callahan of lying intentionally. But they said they were nevertheless troubled that he wasn't more forthcoming earlier. They also attacked the company for failing to fire employees who were involved in that "mistake."

Yang defended that practice, saying no one was fired because "I really don't believe our employees acted in a way that was intended to deceive." He added that some "tightening" of processes had occurred.

Focus on victims' families
Two broader themes also ran through much of the politicians' questioning: Why hasn't Yahoo provided financial assistance to the families of two imprisoned dissidents in question, and what does it plan to do if confronted with similar situations in the future?

The first question was especially charged because Shi's mother attended the Capitol Hill hearing and was seated just behind Yang. At the start of the hearing, Lantos asked Yang to "beg the forgiveness of the mother whose son is languishing behind bars due to Yahoo's actions."

When finally given the opportunity to begin his opening statement, Yang said he wanted to "personally apologize for what they and their families are going through." He turned and bowed to Shi's tearful mother.

Repeatedly pressed by audibly incensed politicians, Yang and Callahan went on to acknowledge that they hadn't given "direct" help to the affected families but had supported "independent research" into human rights groups.

Lantos and several others suggested that the company would be wise to change that and voiced frustration at what they perceived as noncommittal answers. (Yang never outright committed to offering aid to the families but said the company would "certainly study it.")

"You're one of the richest companies in the country, and you don't know whether you can provide for the humanitarian needs for a couple of families?" asked Rep. Brad Sherman (D-Calif.), who arguably became the most visibly agitated about the issue.

Rep. Chris Smith (R-N.J.), who presided over the panel hearing with Callahan last year, said one way Yahoo could make amends is through settling a U.S. lawsuit brought against it earlier this year by the families of Shi and Wang. They allege that the company "willingly" divulged information about the two pro-democracy online writers, leading to their imprisonment.

"Settle it, and I would say settle it generously in their favor," Smith urged. "That would be one way you could convey to the committee, to shareholders, and especially (to) the victims that you recognize there are true victims because of this complicity."

Yahoo has already filed for dismissal of that suit, but Callahan told Smith that the company would be "open" to discussing settlement options with the families.

Next steps
As for what Yahoo plans to do if confronted with similar situations in the future, the answer was murkier. Callahan said the company plans to structure operations in any new foreign entities (Vietnam, for instance, is being explored) so that employees there aren't put in a position where they're legally bound to turn over customer information in cooperation with admittedly "overbroad" laws like the ones in China.

More than once, he and Yang also mentioned the global "industry standards" Yahoo and other technology companies are working to devise with human rights groups and socially responsible investors.

A minority of politicians present suggested that perhaps Yahoo shouldn't be made the scapegoat for broader conflicts among the policies of the United States and less-democratic nations.

Rep. Robert Wexler (D-Fla.) said the issue begs some "self-reflection" among the U.S. government regarding its decision to encourage trade with China in the first place. And Rep. Adam Smith (D-Wash.), whose constituency includes Microsoft, said weighing whether to stand up to oppressive regimes or to obey their laws is "not a simple black-and-white decision" for companies.

But most committee members made it clear that they're not content to let the industry regulate itself in this area. They touted a recently approved bill that would, among other things, prohibit all American companies from locating their servers and personal information about their customers in regimes deemed by the U.S. government to be Internet-restrictive.

Lantos and others repeatedly sought Yahoo's endorsement of that bill, whose prospects for passage into law remain unclear. But the company representatives punted, saying they didn't know enough about the details of the new version to comment.

In any case, Yang said of the company's future plans, "we'll take more responsibility both morally and ethically."

 

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