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Journalists at influential business news website in China detained in alleged extortion scam

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A Chinese man checking on his smartphone walks past an "at" sign on display on a street in Beijing, China Thursday, Sept. 4, 2014. THE CANADIAN PRESS/AP, Andy Wong

BEIJING, China - Police in Shanghai detained the chief editor and several employees of an influential Chinese financial news site on allegations they extorted money from companies by threatening to publish negative news about them, state media said Thursday.

The case surrounding www.21cbh.com, the website for the 21st Century Business Herald, is the latest scandal involving news corruption in China, where extortion schemes have plagued the state-owned media, especially outlets specializing in financial news.

Several weeks ago, financial news managers at state broadcaster China Central Television were placed under police investigation for alleged graft.

Business news in China is especially fertile territory for corruption because many business executives are willing to pay bribes to win a competitive edge and many poorly trained journalists turn to extortion to make extra money, said Tong Bing, a journalism professor at Shanghai-based Fudan University.

The corruption is enabled by the country's lack of true press freedom in which one news outlet could expose corruption in another, Tong said.

"What we truly need is more openness," he said. "Then, there will be more space for objective, fact-based coverage, and the media can supervise each other, reducing such problems."

In the latest case, the chief editor and a deputy editor of the website, as well as executives from two public relations agencies, were among eight people detained by police in China's financial hub of Shanghai, the official Xinhua News Agency said.

The financial news site confirmed in a brief online statement that several of its employees were taken away on Wednesday night in a police investigation but did not give details.

Xinhua said the management of the website colluded with public relations agencies to blackmail renowned companies or those trying to be listed on an exchange by threatening them with negative coverage. The suspects and their companies profited handsomely from the scheme, trading favourable coverage for money or exorbitant advertising contracts, Xinhua said.

The news site said it will co-operate with the investigation. "We will deal with related matters with a responsible attitude," its statement said.

Chinese newspapers, broadcasters and other media are all owned by the state or the ruling party. But they must support themselves financially and, so long as they work within official censorship guidelines, most can make their own editorial decisions.

Low-paid journalists routinely accept money from companies to attend events or report on them and sometimes to suppress information about scandals.

"Generally speaking, the Chinese media are yet to form a consensus on how to discipline themselves," said Xie Jing, also a journalism professor at Fudan University.

Last year, journalist Chen Yongzhou confessed he took money to publish false reports that a manufacturer of construction equipment, Zoomlion Heavy Industry Science &Technology Co., had fabricated financial information. Chen was detained and his newspaper ran a front-page apology.

In June, Xinhua was required to return 3.5 million yuan ($570,000) to a state-owned bank after investigators concluded it accepted money for coverage or to suppress news. No other details were released.

In another case, a reporter for the Hangzhou Daily in eastern Zhejiang province took more than 300,000 yuan ($49,000) from a public relations company, according to the party-run People's Daily.

In the latest investigation into the state broadcaster's financial news channel, state media report say Guo Zhenxi, the channel's director, had effectively controlled a dozen or so public relations companies. Businesses had to pay "protection fees" or hefty public relations fees to avoid negative news coverage, whereas firms receiving favourable news reporting offered up advertising contracts and stock options, they say.

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