Alibaba's CEO resigns after fraud case - Alibaba

The CEO and chief exec of Alibaba.com have left the company after taking some responsibility for fraud found on the website.

Although they claim they had nothing to do with the fraud, CEO David Wei and CE Elvis Lee are both leaving the company after internal company investigations found a spike in the number of fraudulent transactions conducted on its site by the so-called China Gold Suppliers network of high volume members in late 2009 and throughout  2010.

It's not quite a case of Alibaba and its 40 thieves. The company said that no-one in the company was involved in the activity, but the pair were leaving after taking responsibility for the "systemic breakdown."

Jonathan Lu, CEO of Alibaba Group's retail website Taobao.com, has been named as the replacement, taking on both companies.  

According to a statement, the probe into the fraud at Alibaba, which also owns Yahoo China, was started when an eagle eyed employee noticed suspicious activity and went running to the board.

We assume he got a gold star and a pat on the back, as the investigation found that some suppliers offered bulk orders of consumer electronics at "very attractive prices, a low minimum order quantity and less reliable payment transfer methods." The value of the average claim was below $1,200, Alibaba said.

It said it had shut down 2,326 "Gold Suppliers" found to have used the site to defraud buyers.

"One of our most important values is integrity," founder and non-executive chairman Jack Ma said in a statement obtained by the WSJ. 

"That means integrity of our employees and integrity of our online marketplaces as trusted and safe places for our small business customers."

"We must send a strong message that it is unacceptable to compromise our culture and values. It saddens me to see talented people leave the company," he added.

Although the company is confident its financial status will not be affected, the Hong Kong Stock exchange showed a  3.7 percent fall in shares.