Zhang Xinzhu mum on teacher's Nobel due to Qualcomm scandal

Want China Times, Staff Reporter 2014-10-15

Zhang Xinzhu. (Internet photo)

Zhang Xinzhu, director of the Institute of Quantitative & Technical Economics of the Chinese Academy of Social Sciences, has chosen to remain silent over recent allegations that he took money from Qualcomm to advise the chip supplier on an anti-monopoly probe while a member of the investigating body's consulting panel of experts, reports the financial news website of Chinese web portal Sohu.

Multiple media outlets have tried to speak to Zhang to get his reaction after this year's Nobel economics prize was awarded to French economist Jean Tirole, under whom Zhang studied at the University of Toulouse. Zhang has kept his silence, however, likely as a result of the harsh criticism he has faced since the rumors that he advised Qualcomm emerged.

Qualcomm agreed to pay Zhang US$1.4 million for consultation regarding the government's anti-monopoly investigation into the company and Zhang received US$77,000, said Xu Kunlin, director of the Price Supervision and Anti-monopoly Bureau of the National Development and Reform Commission. The state newswire Xinhua published an article blasting the scholar for "taking money to help foreign monopoly company to get away from their crimes."

The scholar said his actions did not constitute a violation of his previous job's regulations nor was there any conflict of interest. He argued that although he was a member of a board of professional consultants to the State Council's anti-monopoly commission, there was no regulation that prohibited him from being an adviser to the company at the same time, as the commission did not seek his advice when they launched their anti-monopoly probe into Qualcomm.

The chipmaker faces an unprecedented fine of up to 10 billion yuan (US$1.6 billion) as the government deems it has engaged in monopolistic practices in the Chinese market by charging exorbitant licensing fees.

Sohu said Zhang's arguments were based on the previous successes of his teacher Jean Tirole and the late French economist Jean-Jacques Marcel Laffont. The two scholars were Microsoft's economic advisers from 1999 onwards and their research helped the US tech giant win anti-monopoly lawsuits.

Sohu cited an article of the work regulations for the anti-monopoly commission which specifies that scholars and experts working for the government agency have to maintain a good reputation and are banned from participating in activities that would cause a conflict of interest with the commission, nor are they allowed to carry out activities unrelated to their duties without the commission's approval. Sohu said Zhang could have avoided the negative fallout if he had not been a consulting expert for the commission at the time.

Zhang was sacked from his post on Aug. 12 this year. He is the first member of the consultative body to be dismissed since the commission was established in 2011. Sohu attributed his dismissal to his failure to replicate the success of his teachers. It cited Zhang's previous participation in the Chinese government's attempt to reform the telecommunication industry, wherein Zhang's proposal was criticized for putting efficiency over fairness.

Laffont led research on France's reform of the telecommunication industries and established the most authoritative theory for telecommunication and internet industries' competitiveness and regulations.

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