A group of Chinese political activists filed a lawsuit in federal court against Yahoo on Tuesday, saying the company failed to properly oversee a $17 million fund it created a decade ago to help Chinese writers, democracy advocates and human rights lawyers persecuted for standing up to the country’s government.
The lawsuit, filed in the U.S. District Court in Washington, accuses Yahoo senior executives of turning a blind eye as the fund’s manager, Harry Wu, illegally spent millions of dollars on high-end real estate, inflated staff salaries and a museum documenting the history of forced labor camps in China.
According to the lawsuit, Wu, a veteran Chinese dissident who died last April, spent less than 4 percent of the money on humanitarian aid.
The lawsuit demands that Yahoo replenish the trust, which has been significantly depleted.
Suzanne Philion, a spokeswoman for Yahoo, declined to comment, saying the company does not discuss litigation.
The lawsuit is a reminder of one of the more ignominious episodes in Yahoo’s history. In 2007, the company, based in Silicon Valley, belatedly acknowledged that it had provided Chinese authorities with the identities of subscribers in China whose emails had angered the government. The disclosures led to the jailing of two activists who were given 10-year sentences.
In a public rebuke, a congressional panel criticized Yahoo’s chief executive at the time, Jerry Yang, and accused him of lying about the company’s cooperation with Chinese security officials.
“While technologically and financially you are giants, morally you are pygmies,” Rep. Tom Lantos, D-Calif., said during a hearing.
To settle litigation against the company, Yang subsequently gave $3.2 million to relatives of each of the two jailed dissidents. And in an unusual move, the company provided more than $17 million for the creation of a fund dedicated to helping Chinese activists and their families.
To administer the money, Yahoo turned to Wu. According to the foundation’s filings, only $700,000 was distributed to Chinese dissidents or their families, many of whom were forced into poverty by the government.
Of the original $17.3 million, less than $3 million is thought to remain.