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By Brenda Goh
SHANGHAI, Aug 8 (Reuters) - A British investigator and hisAmerican wife will stand trial in Shanghai on Friday in a casethat is seen as key to a bribery investigation againstGlaxoSmithKline Plc and has unnerved the growingcommunity of corporate sleuths in China.
Peter Humphrey and his colleague and wife Yu Yingzeng, whowere detained over a year ago following work they did for theBritish pharmaceutical giant, face charges of illegallyobtaining private information on Chinese citizens, for whichthey can receive a maximum sentence of up to three yearsimprisonment.
Their arrest sent shivers through the country's riskconsultancy community, whose members are much in demand bymultinationals and foreign investors for information onpotential partners or firms in China, where such data is noteasily available.
"In the past, people were almost encouraged to turn a blindeye to where the due diligence companies or investigators weregetting their information," said Pooja Nair, a Los Angeles-basedassociate at law firm Foley & Lardner.
"(This case) makes it clear that in order to get informationyou're taking a huge risk in China."
The court case, which also coincides with a growing numberof Chinese anti-trust probes that have seen authorities raidoffices of Western firms, highlights the obstacles foreigncompanies face in navigating China's murky business world.
Foreign investors in China now have to adhere to morerigorous anti-corruption laws in the West even as informationabout their prospective Chinese investments becomes harder toobtain.
ChinaWhys, the risk consultancy the couple ran, was part ofthe corporate investigations industry in China which has seen asurge in demand amid more stringent enforcement of the U.S.Foreign Corrupt Practices Act and an increase in the number ofChinese firms involved in overseas deals.
The couple's arrest last year coincided with a Chinese probeinto allegations that GSK staff had funnelled hundreds ofmillions of pounds through travel agencies to bribe localdoctors and health officials to boost sales and raise prices.
While Chinese authorities have not openly connected thearrests of the Humphreys to the GSK probe, Peter Humphrey saidin a note last year when he was already in detention that hefelt "cheated" by GSK, adding that the drugmaker had not sharedthe full details of the bribery allegations.
A GSK spokesman declined to comment on the trial. The drugmaker said in July that the issues relating to its Chinabusiness were "very difficult and complicated."
Peter Humphrey, who has apologised on state television forbreaking any Chinese law, is expected to plead guilty. He workedfor Reuters as a journalist in the 1980s and 1990s.
China has in recent years moved to tighten its privacy laws.In 2009, it amended its criminal code to ban the transfer, saleor gathering of Chinese citizens' information by governmentfirms and companies involved in telecoms, transportation,education and medical treatment.
"Even before the investigation there had already been ashift in the industry to focus entirely on public information,to make everything legitimate...I think the Humphreyinvestigation pushed the transition a little faster," said aShanghai-based investigator at a foreign-owned research firm. (Additional Reporting by Engen Tham; Editing by Kazunori Takadaand Raju Gopalakrishnan)
