Anti-counterfeiting group suspends Alibaba and reveals conflicts of interest

An anti-counterfeiting group said Friday that it is suspending Alibaba’s membership after an uproar by some companies that view the Chinese e-commerce giant as the world’s largest marketplace for fakes.

The International Anti-Counterfeiting Coalition told members that it had failed to inform the board of directors about conflicts of interest involving the group’s president, Robert Barchiesi.

Earlier Friday, the Associated Press reported that Barchiesi owned stock in Alibaba, had close ties to an Alibaba executive and had used family members to help run the coalition.

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After the report came out, the coalition sent a letter to members saying conflicts had not been disclosed to the board “because of a weakness in our corporate governance procedures.”

In its letter, the board said that as a result of members’ concerns, it was suspending a new class of membership that recently enabled Alibaba to join. The move would also affect two other companies that signed up under the new rules.

At issue is the independence of a small but influential coalition that lobbies U.S. officials and testifies before Congress.

Alibaba’s membership could help shape the global fight against counterfeits. Fakes damage companies’ bottom lines, can harm consumers who buy such products without knowing they’re fakes, and feed a vast underground money-laundering industry that supports criminal syndicates.

In recent weeks Gucci America, Michael Kors and Tiffany have quit the Washington-based coalition, which has more than 250 members.

The AP found several ties between the group’s president and Alibaba:

• Barchiesi has owned Alibaba stock since the company’s 2014 listing in New York. The anti-counterfeiting group said in a statement that the holdings represent “a small percentage of his investment portfolio.”
• Matthew Bassiur, who took over as vice president of global intellectual property enforcement at Alibaba in January, hired Barchiesi’s son, Robert Barchiesi II, to work at Apple in 2011. Alibaba said that hire was made on merit. Apple declined to comment.
• Bassiur is a founding board member of the ICE Foundation, which supports U.S. Immigration and Customs Enforcement employees. Since 2013, the foundation has been run by Barchiesi’s other son, James Barchiesi. That same year, the foundation’s board voted to award a contract for “fiscal and operational management” to a private company, also run by James Barchiesi. The foundation has received grants.

Critics feared that Alibaba would use membership in the anti-counterfeiting group to gain legitimacy while papering over fundamental flaws in how it does business. Gucci and other brands owned by France’s Kering Group allege in U.S. court filings that Alibaba knowingly profits from the sale of fakes. Alibaba has dismissed the idea of the case, calling it “wasteful litigation.”

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