At China's Alibaba, chairman Ma's dealings raise red flags

By Gerry Shih, Matthew Miller and Paul Carsten SAN FRANCISCO/BEIJING (Reuters) - Part-way through Alibaba Group Holding Ltd's long-awaited IPO prospectus was a subtle, but striking, warning: investors should know that lead founder and executive chairman Jack Ma might work against the company's best interests. The acknowledgement, on page 42 of a 300-plus-page filing, highlighted longstanding questions about the Chinese e-commerce giant's complex corporate structure and potential conflicts of interests surrounding Ma, who started Alibaba in his one-room apartment in 1999 and has since branched out into markets as diverse as e-payments and financial investment. One hot-button issue is Ma's control of Alipay, the PayPal-like affiliate established by Alibaba in 2004, which continues to provide the lions' share of payment services for the company's retail marketplaces. Four years ago, Alibaba spun out Alipay to a group including Ma, who holds a 46 percent stake in Alipay through another company, Zhejiang Alibaba E-Commerce Co. A row ensued: Alibaba investors including Yahoo Inc and SoftBank Corp objected to the spinoff, which Ma argued was needed to comply with Chinese central bank regulations governing foreign ownership of financial firms.

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