Alibaba.com Ltd., China’s largest e-commerce website, announced the resignation of two of its most senior leaders Monday after an internal investigation found more than 2,000 fraudulent virtual storefronts had been set up with the help of company salespeople.

In a company statement, Alibaba.com said Chief Executive David Wei and Chief Operating Officer Elvis Lee were not involved in the scams but wanted to shoulder responsibility for the “systemic break-down" in Alibaba.com’s "culture of integrity.”

Wei is being replaced by Jonathan Lu, chief executive of sister company Taobao.com, a hugely popular online shopping website. Alibaba.com is the flagship site of Alibaba Group, a multibillion-dollar Internet empire headed by one of China’s most charismatic business figures, Jack Ma.

In addition to Taobao, the company owns Yahoo’s China operations and Alipay.com, an online payment service. Founded in 1999, Alibaba.com has become one of the world’s largest business-to-business platforms in the world, linking sellers of Chinese manufactured goods to millions of wholesalers overseas. The company is about 40% owned by Yahoo.

The company said it began noticing a surge in fraud claims in late 2009 and launched a probe. Findings showed that about 100 members of the company’s 5,000-member sales staff helped fraudsters evade steps to authenticate their businesses so they could pretend to sell electronic goods at attractive terms and prices.

Alibaba.com said it had shutdown those storefronts but that the investigation was ongoing.

Alibaba.com shares fell 3.5% in trading in Hong Kong on Monday before the announcement.

-- David Pierson

Photo: Jack Ma, chairman and chief executive of Alibaba Group, speaks at a news conference in Beijing, January 19, 2011. Credit: Jason Lee / Reuters

The man known as the father of China's so-called Great Firewall is defending his invention, which blocks out hundreds of thousands of foreign websites, and admits to owning software to evade the censorship he helped create.

In a rare English-language newspaper interview published Friday, Fang Binxing, president of the Beijing University of Posts and Telecommunications, told the state-owned Global Times that he owned six virtual private networks, or VPNs, to scale the firewall and determine what was and wasn't accessible in China.

"I have six VPNs on my home computer," Fang, 50, told the newspaper. "But I only try them to test which side wins: the GFW or the VPN."

He added, "I'm not interested in reading messy information like some of that anti-government stuff."

Fang, who could not be reached for comment Friday by The Times, said the filtering technology was operational five years before it came online in 2003, and he likened the system to traffic control that constantly required upgrading.

Chen Weiwei, also known as the Running Naked Man, has become a viral sensation in China after stripping down to his underwear out of frustration with the nation's railway system that has left many unable to travel during the country's Spring Festival holiday.

David Pierson, a Times reporter based in China, provided a report of Weiwei's exploits, the public support for his actions, and the fiasco it's created for the government over on our sister blog, Money & Company.

Pierson reported:

Chen's unlikely saga started last Tuesday when he couldn't buy tickets home despite waiting in line 14 hours at the west Jinhua railway station in China's eastern Zhejiang province.

Though he stood only third from the front of the line, Chen complained people cut in front of him, costing him his chance at the few tickets available to his hometown in central Henan province, 15 hours away by train.

With nothing left to do, Chen ripped off his clothes down to his underwear, shoes and socks and stormed into the station master's office looking for an explanation.

A photographer for a state news service captured the moment in the office, snapping pictures of a doughy Chen in tight boxer briefs next to a poker-faced rail official smoking a cigarette and writing a text on his cellphone.

The photos of Chen quickly went viral, with Internet-users nicknaming him the "running naked man" and calling him a hero for standing up to the state's rail monopoly.

"Running naked didn't put shame on you," said one Web post addressed to Chen on the popular portal Sohu.com. "It put shame on the system."

To read Pierson's full-story on Weiwei, the Running Naked Man, read his Money & Company post, Unable to get train ticket, man strips in frustration, becomes Chinese Internet sensation.

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-- Nathan Olivarez-Giles

twitter.com/nateog

Image: A screenshot of Chen Weiwei in a Chinese railway official's office, posted online. Credit: news.163.com

Facebook Inc. chief Mark Zuckerberg was spotted in Beijing on Monday touring the campus of China’s No. 1 search engine, Baidu, ending months of anticipation as to when he would visit China, the world’s largest Internet market.

Baidu confirmed the meeting between Zuckerberg and Robin Li, the search engine’s 42-year-old, American-educated chief executive, who has stewarded the site into the second-largest Internet company in China. Grainy photographs of the two men were posted on a microblog belonging to a Baidu employee.

A Baidu spokesman declined to say what the two tech moguls discussed in the meeting, which also was attended by Zuckerberg’s Chinese American girlfriend Priscilla Chan.

“They’ve known each other for some time,” Baidu spokesman Kaiser Kuo said of Li and Zuckerberg. “It does not foretell Facebook’s entry into China.”

Facebook, like Twitter and YouTube, has been blocked by censors in China since 2009. China’s government is extremely sensitive about social media because of its ability to organize groups rapidly. However, more Chinese are downloading software that allows them to evade censors and access the banned sites.

For weeks, Chinese have been joking about Zuckerberg’s visit because his hugely popular site is blocked in China.

"We warmly welcome the founder of  '404 NOT Found' and 'Mr. The Search Result Cannot be Displayed’ to visit China!" read one post, a reference to the error messages Internet users often receive when they visit banned sites in China.

Another poster suggested that the Zuckerberg biopic “The Social Network” be renamed in China “The Connection Has Been Reset” -– another error message commonly found here.

Zuckerberg, who was recently named Time magazine’s person of the year, has been learning Mandarin in preparation for the trip. He and Chan ordinarily take a two-week trip abroad, according to a September profile of Zuckerberg in the New Yorker magazine.

Though the meeting with Baidu will spark speculation over Facebook’s ambitions in a country with 440 million Internet users, China remains a highly competitive market for social media. Its largest Internet company, Tencent Holdings, boasts 637 million accounts for its instant messaging service, QQ. By comparison, Facebook has 500 million accounts globally.

Oak Pacific Interactive, the parent company of Facebook clone Renren, is planning a $1-billion initial public offering in Hong Kong, according to the Wall Street Journal.

Facebook launched a Chinese-language site in 2008, about a year before it was blocked. If Zuckerberg is interested in regaining access to China, he will need a sound relationship with the government officials who bedeviled Google. Ironically, Zuckerberg and Chinese censors have something in common: being criticized for violating privacy.

-- David Pierson