Paper fights back against journalist arrest, Zoomlion alleged fraud back in spotlight

Guangzhou-based New Express ran a front page story today with a massive headline reading RELEASE HIM (请放人). The article requests the Changsha police authorities to release Chen Yongzhou (陈永洲), a journalist working for the newspaper who was arrested on October 19 at work. Changsha police officers had crossed provincial borders from Hunan to nab Chen in Guangzhou, an alarming development for the city’s feisty journalists.

Chen’s arrest is believed to be linked to a series of articles published in New Express he wrote in which he says that Zoomlion Heavy Industry, a heavy machinery maker based in Changsha, engages in fraudulent practices including faking sales and exaggerating profits.

In July, Gao Hui (高辉), secretary to Chairman of the Board of Zoomlion, stated via his Sina Weibo account that the negative reports had depressed the company stock prices. He accused the writer and the newspaper of being paid off by interest groups who had benefited from the drops in the company’s stock price.

UPDATE:

The BBC reports: China reporter Chen Yongzhou ‘confesses’ on TV

An imprisoned Chinese journalist whose newspaper has made front-page appeals for his release has confessed to wrongdoing on state TV.

“I’m willing to admit my guilt and to show repentance,” said reporter Chen Yongzhou. He was arrested over claims he defamed a partly state-owned firm in articles exposing alleged corruption.

State media said he had admitted writing false stories for money.

Several high-profile suspects have made televised confessions recently.

In the footage, detained journalist Chen Yongzhou is paraded for the camera. Handcuffed and flanked by police officers he is marched along a corridor. Then he sits, a lone figure in a green police-issued top, in an interrogation room, making his purported confession. He’s clearly susceptible to pressure.

In many countries Chen Yongzhou’s detention, and the broadcast of the footage of it, would provoke a legal outcry. Corruption is known in Chinese journalism, stories planted to blacken rival firms. But the facts of this case are murky and this “confession” does little to clear them up.

All China’s major construction equipment firms have been under severe financial pressure recently as the economy, so reliant on construction, has slowed. And after Mr Chen’s newspaper printed a brave and highly-unusual front-page call for his release, the police have been under pressure too.

The release of the “confession” may be their attempt to regain the initiative. But it’s likely to fuel the row, with questions about the role of the police and of state television, and the way they have obtained and aired Mr Chen’s admission.

Xinhua News Agency is more convinced of the truth of Chen’s confession: Detained reporter apologizes for releasing untrue stories. However, judging by the chart below, the markets might take more convincing than CCTV and Xinhua News Agency that Zoomlion remains a reputable company.

Zoomlion (HKG: 1157) stock price Monday October 21 to Friday October 25, 2013

zoomlion stock

UPDATE 2:
— October 28 12pm The market appears to like CCTV confessions.

Zoomlion 2

Companies and brands affected
Zoomlion Heavy Industry (HKG: 1157, SZ:000157)

Links and sources
New Express: 请放人
China Media Project: Paper goes public over reporter’s detention

Updates:
China Media Project: The New Express story in today’s papers, Guilt and shame in China’s media
New York Times: Chinese Newspaper Asks Police to Free Detained Reporter

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