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Perfect World audit dismisses allegations of corruption

By Matthew Handrahan

Perfect World audit dismisses allegations of corruption

Mon 14 May 2012 9:11am GMT / 5:11am EDT / 2:11am PDT

Independent audit clears CEO of claims relating to embezzlement and tax evasion

An internal audit at the Chinese online game company Perfect World has refuted a series of anonymous allegations regarding its relationship with Beijing Zhizhu Network Technology Co..

The claims, which appeared on a number of Chinese websites in January this year, related to the financial dealings of Perfect World's CEO, Mr Michael Yufeng Chi.

The allegations included the suggestion that Chi had overpaid for Zhizhu's services and a 20 per cent investment he made in the company, that Chi and his family had received personal financial benefit from the renovation of Perfect World's offices, and that Chi had evaded taxes.

The investigation was conducted by an audit committee and the law firm Greenberg Traurig. It found the allegations to be inaccurate, though it acknowledged weaknesses in Perfect World's, "corporate governance procedures."

The audit committee's recommendations to Perfect World's board of directors included the full disclosure of all dealings with Zhizhu in the company's next annual report, the removal of any potential conflicts of interest with Zhizhu, and the general improvement of practices regarding dealings with related parties.

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