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The chief executive and chief operating officer at online commerce site Alibaba.com – one of China’s largest website companies – have both stepped down, the company announced in a statement to the Hong Kong stock exchange on Monday.

The resignations come after an internal investigation into fraudulent activities at the company. While the two managers are not implicated in the fraud, the board accepted that chief executive David Wei and COO Elvis Lee wished to “take responsibility for the systemic break-down in our Company’s culture of integrity”, the statement said.

You can read the company’s statement in full here.

Here’s what the company says happened:

Our Company has determined that 1,219 of our Company’s China Gold Supplier customers who signed up in 2009 and 1,107 China Gold Suppliers who signed up in 2010 engaged in fraud against our buyers…

The investigation has determined that about 100 sales people, out of a field sales force of about 5,000, as well as a number of supervisors and sales managers, are directly responsible in either intentionally or negligently allowing the fraudsters to evade our Company’s authentication and verification measures and systematically establish fraudulent storefronts on the international marketplace. The investigation concluded that the pursuit of short-term financial gain at all cost had tainted parts of our sales organization, risking serious damage to our Company’s core values.

Jonathan Lu, the CEO of Taobao – an Alibaba.com affiliate – has been named as the new chief executive of Alibaba.com.

Here is an extract from the statement from Alibaba Group’s chairman, Jack Ma.

“One of our most important values is Integrity. That means integrity of our employees and integrity of our online marketplaces as trusted and safe places for our small business customers,” said Mr. Jack Ma, non-executive Chairman of our Company. “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, but David and Elvis are doing the honorable thing to accept full responsibility for this, and I want to thank them for their tireless service to the Company.”

Related reading:
Alibaba.com CEO and COO Step Down, Alizila