Not-guilty verdict for iQiyi's local operators overruled in 2nd trial

Taipei, May 8 (CNA) The Taiwan High Court on Wednesday overturned the ruling of a lower court and found three Taiwan nationals guilty of helping Chinese over-the-top (OTT) service provider iQiyi illegally operate in Taiwan.

There is direct evidence showing that Fan Li-ta (范立達), Chao Shan-chen (趙善真) and Yang Ming (楊鳴) were under the substantial influence of iQiyi's Beijing headquarters as they conducted business in Taiwan, the court said in its ruling.

Previously, the three individuals were acquitted by Taiwan Shilin District Court in April last year due to "insufficient evidence" the men violated the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area, which prohibits Chinese profit-seeking enterprises from carrying out business activities in Taiwan unless approved by the competent authority.

However, based on the suspects' confessions and the work plan of OTT Entertainment Ltd. -- the company where they worked as executives and which effectively operated as a subsidiary of iQiyi -- it is believed that Beijing iQiyi provided operational funds to the company, the high court said.

The personnel, finance, and organization of OTT Entertainment Ltd. were also under the direct control of Beijing iQiyi, making them instruments for the Chinese company's illegal operations in Taiwan, rather than simply authorized distributors as initially stated, according to the court.

Beijing iQiyi's application to establish a subsidiary in Taiwan was rejected by the Investment Commission under the Ministry of Economic Affairs (MOEA) in 2016.

On Wednesday, Fan and Yang were each sentenced to five months in prison, with Chao given three months. The jail terms can be commuted to fines.

However, the salary income of approximately NT$40 million (US$1.2 million) earned by the three over the six years they worked for the company was not considered the proceeds of crime, as argued by prosecutors in the first trial in 2022, and therefore will not be confiscated, the court said.

In response, Fan, a former political commentator, said the case was absolutely politically-motivated and indicated he is considering appealing the verdict.