WASHINGTON (CN) – Seven former political prisoners claim in federal court a human rights group Yahoo set up to atone for turning over the personal information of dissidents to the Chinese government was a sham, spending most of its budget for the personal benefit of the Internet giant.
Yahoo set up the Yahoo Human Rights Fund Trust in 2007 as part of a settlement of a lawsuit that claimed the tech company had turned over to the Chinese government the personal information of dissidents who used Yahoo email to communicate.
The fund was supposed to provide financial assistance to political prisoners in China, but so far only $700,000 – or 4 percent of the fund’s original assets – has gone to that purpose, while most of the rest has gone to a nonprofit one of the fund’s overseers owns, according to a 39-page complaint filed Tuesday in U.S. District Court for the District of Columbia.
Meanwhile the company that received the Yahoo money told one Chinese political prisoner seeking help that it “had decided to stop providing humanitarian assistance to imprisoned Chinese dissidents,” and did not publicize the case of another, according to the complaint
“From the beginning, the Yahoo defendants’ management of the Yahoo trust highlighted the cynical realty that Yahoo used the Yahoo trust as window-dressing: it wanted to benefit from the creation of the Yahoo trust, but had no interest in fulfilling its actual mission or complying with its terms and the obligations that came with it,” the complaint reads. “And Yahoo did benefit, enormously.”
In addition to dismissing the original 2007 lawsuit, Yahoo also used assets in the trust to deal with two other “potential lawsuits.” The fund also helped shield Yahoo from criticism of its human rights record, the former political prisoners claim in the suit.
Yahoo allowed Harry Wu, who signed the 2007 settlement on behalf of the plaintiffs without consulting them, to oversee the fund’s $17.3 million coffers. Wu also ran the Laogai Research Foundation and the Laogai Human Rights Organization, two Washington, D.C. nonprofits that were the recipients of most of the Yahoo trust’s money and were meant to handle its “day-to-day administration,” according to the complaint.
Yu Ling, a plaintiff in the 2007 whose wife was imprisoned in China and who is also one of the plaintiffs in the new case, filed a separate suit against Wu in 2011, claiming Wu had taken part of his settlement money. Wu used money from the Yahoo trust to fight that suit, the complaint claims.
Yahoo put in place Executive Vice President and General Counsel Michael Callahan as the director of the fund and he was replaced by General Counsel Ronald Bell after Callahan left Yahoo. Though both were supposed to keep Wu in check, neither did, instead allowing him almost complete control over the fund, according to the complaint.
In 2015 the Laogai Research Foundation bought a $2.55 million townhouse in Washington, with most of the money coming from the Yahoo trust. Wu also gave himself a $60,000 raise shortly after the settlement pumped his organizations full of new cash, according to the complaint.
Wu, who died in 2016, also allegedly used the fund to fight a sexual harassment suit and an employment suit filed against him, according to the complaint.
“None of these expenditures in any way furthered the Yahoo trust’s mission of providing humanitarian assistance to imprisoned Chinese dissidents,” the complaint reads. “To the contrary, each expenditure directly undermined that purpose, by depleting the amount of money available to accomplish that purpose.”
Yahoo was warned several times that Wu was misusing the fund but did nothing to stop it, according to the complaint
The plaintiffs in the case, who are represented by Times Wang, an attorney with the Washington firm Cohen Milstein, seek unspecified damages as well as disgorgement of the funds given to the Laogai Research Foundation and an accounting of the Yahoo trust’s assets.
Wang did not respond to a request for comment on the case sent Wednesday morning.
Named as defendants are Yahoo, the Yahoo Human Rights Fund Trust, Callahan, Bell, Wu and the Laogai Research Foundation and Human Rights Organization.
Yahoo did not respond to a request for comment. A request sent to LinkedIn, where Callahan now works, was also not returned before publication. Bell, who left Yahoo in March, could not be reached for comment.
The Laogai Research Foundation’s website is not longer operational and an email sent to an address found on an old press release for the group was returned unsuccessfully.