Jack Ma Dissembling on Yahoo Dispute?
For more than a month, Alibaba Group founder Jack Ma has been besieged by demands that he explain how his company had decided to transfer ownership of its online payments unit to a new entity under his control, apparently without the go-ahead from principal shareholders Yahoo and Softbank Corp. This week he seemed eager to respond to those demands – after a fashion.
In a text-message exchange with the chief editor of Chinese business magazine Caixin published on Monday and in a press conference a day later, Mr. Ma offered a lengthy defense of Alibaba’s divesting itself of the payment unit, Alipay, which the company had earlier said was necessary to comply with a Chinese central bank rule prohibiting foreign ownership of an online payment company.
The takeaway: A lot of sound and fury, none of which is likely to silence his critics.
According to Caixin, Mr. Ma contacted top editor Hu Shuli on Sunday in response to a Caixin editorial titled “Why Jack Ma is Wrong,” in which Ms. Hu criticized the executive’s handling of the Alipay transfer. In a conversation that spread over two days, Mr. Ma accused Ms. Hu of passing judgment on the matter “without knowing the basic facts” and said the Alipay issue involved “more than just commercial interests.”
At the subsequent press conference, held in Alibaba’s home city of Hangzhou, Mr. Ma went on the offensive against Yahoo founder Jerry Yang and Softbank CEO Masayoshi Son, accusing them of engaging in “stalling tactics.”
“As shareholders, they were right,” Mr. Ma said. “But as directors, they wereboth wrong.”
Yahoo and Softbank together own more than 70% of Alibaba Group. Mssrs. Yang and Son both sit on Alibaba Group’s board of directors.
Whether or not there are national security implications to Alipay’s ownership structure, Mr. Ma’s insistence on the need to transfer ownership is not really at issue. Alibaba Group and Yahoo appear to agree that the transfer needed to take place in order to obtain proper licensing for the unit (licensing Alipay obtained at the end of May).
What Mr. Ma did not address is why the transfer took place without board approval, and whether it was in line with the companies’ original contract in 2005, which stipulates that any transaction worth more than $10 million that involves the transfer of assets, including subsidiaries, of Alibaba Group must be approved by the company’s board or shareholders.
Responding to those questions in his conversation with Caixin’s Ms. Hu, Mr. Ma said only: “It’s a shame that people don’t believe Chinese entrepreneurs can honor the spirit of contracts, even now, with a better understanding of the law than foreigners.”
Alibaba Group has previously said that the transfer of Alipay had been discussed at numerous board meetings and that the board had been informed of the transfer in July of 2009. Yahoo maintains it was not made aware of the move until March 31 of this year.
The lack of information has inevitably lead to speculation about what really happened, some of it plausible-sounding and some of it clearly creeping downthe path toward conspiracy theory.
Yahoo and Alibaba Group appear to have developed the outlines of an agreement that would allow the companies to resolve the Alipay mess, but that agreement would require a sign-off from Softbank. Softbank has remained curiously quiet on the matter so far, leading some to wonder whether the Japanese telecoms giant plans to challenge Alibabaon the decision.
In either case, until Alibaba decides to offer up the “basic facts” and answer the hard questions, Mr. Ma can expect the criticism to continue.
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