Yahoo is facing litigation for allegedly mismanaging humanitarian funds meant for Chinese dissidents. In a lawsuit recently filed with a Washington-based court by a group of Chinese dissidents, Yahoo's senior executives were accused of not properly protecting funds that were allegedly mismanaged by their former manager Harry Wu. According to the lawsuit, Wu only used $700,000 of $17.3 million worth of humanitarian funds for their original purpose – financing families of Chinese dissidents. Wu allegedly used the majority of the money to buy a $2.5 million townhouse in Dupont Circle in Washington, two additional Washington properties for $1.45 million, and a museum of Chinese labor camps for $2.55 million. Furthermore, a portion of the humanitarian fund, estimated to be around $800,000, was apparently used by late Wu who paid for legal defense against accusations of sexual harassment and mismanaging of federal grants. According to one of the complainants, the lawsuit aims to force Yahoo to replenish the humanitarian funds, of which only $3 million remain, and distribute the funds to their intended recipients.
The $17.3 million humanitarian fund was established by Yahoo as a settlement of a litigation filed against the company in 2017 after Yahoo provided the Chinese government with emails featuring content damaging to China's ruling party, as well as the identities of the individuals who sent the emails back in 2007. In addition to the humanitarian fund, Yahoo also paid a total of $3.2 million to the relatives of two jailed dissidents. Yahoo also suffered criticism from the public and politicians in its home country due to the ordeal. A US congressional panel was convinced that Yahoo wasn't sincere about the extent of the company's cooperation with Chinese officials.
Yahoo suffered through several scandals over the past year, all of which reduced the price that Verizon is willing to pay for the company's Internet business, with the reduction itself amounting to approximately $350 million. Apart from that, Verizon put off its planned acquisition of Yahoo that's now scheduled to be completed during the second quarter of 2017, a quarter later than originally expected. While it's unlikely that this lawsuit will affect the transaction, its arrival lands at a critical period for Yahoo's future.