The Beijing-based web services giant, Baidu Inc. (NASDAQ:BIDU) has lost one of its top executives after an investigation was ordered to probe a recent corruption scandal. An internal probe has discovered conflicts of interest that involve Baidu’s takeover of another firm. Baidu had earlier received a tip-off about his wrongdoings. The company’s revenue stood at $66.38 billion at the end of 2015.
Li Mingyuan, who is 32 years of age, was seen as a potential successor to Robin Li Yanhong, Chief Executive of the business. Extremely powerful, inside China’s tech community, Mingyuan was often called “the price of Baidu”. He has been the youngest vice-president of the business ever.
Li used to head the company’s mobile products and operations.
Memo Describes Resignation to Employees
A memo was sent to all employees informing them about the resignation on Friday. It said that Mingyuan was a part of “huge” economic dealings with the business that Baidu acquired recently, and added that this was unacceptable. Li also did not inform Baidu that he had stakes in the business that was affiliated with the company.
His resignation has been accepted with immediate effect. The note, however, did not disclose any further details whether anyone else was involved or the transactions. A spokeswoman of the business declined to say anything more on the subject.
Though Li Mingyuan has resigned, but he denies the charges, saying that the dealings are “not dishonest”. He says that it is just a misunderstanding. “Baidu is the company that trained me and the house I grew up in. “I never ever thought of doing anything immoral”, he added.
Baidu in Trouble
Baidu has been under the spotlight in recent times over a paid search listings scandal. This Chinese search engine gives advertisers high rankings for a charge.
However, last May, the military and health authorities of China initiated an investigation when it was revealed that Baidu’s search results misinformed a student about a medical treatment. It was ranked higher because Baidu had received payment from the advertiser. The treatment was unapproved and it proved to be unsuccessful. The student eventually died and the company’s image was tarnished as a result.
Since then Baidu (NASDAQ:BIDU) has tightened internal controls. Wang Zhan, a Vice President was removed for violating professional ethics.
China, in the meantime, has come out with new regulations about paid advertisements. The advertising revenue of Baidu has been falling since then.