“I sold my YHOO stake, which I held through my hedge fund last month when it hit $20,” Jackson told Digital Daily. “I still own a small amount personally. I had no idea idea it would fall this much but I finally decided to stop pushing a rope by calling for change from the inside [as a shareholder]. I voted with my feet. This board has the blood of its shareholders on its hands, and I hope they wear that scarlet letter stigma for a long time.”

Asked to comment on Mithras Capital Partners proposal that Yahoo (YHOO) sell itself to Microsoft (MSFT) for $22 a share, Jackson had this to say: “If I was in Redmond, I’d say why not wait a few weeks and pick this company up for a couple of bucks?”  

Less than a week after Yang’s grueling Capitol Hill appareance, during which Committee Chairman Tom Lantos (D., Calif.) upbraided him and another company executive as moral “pygmies,” Yahoo settled a lawsuit brought against it on behalf of two Chinese journalists who were jailed after the company provided Beijing authorities with their email records.

Under the terms of the settlement, Yahoo will provide unspecified financial assistance to the plaintiffs and their families and establish a fund to support other political dissidents. And sources close to the company say it may even offer legal support to the two dissidents and their families.

“After meeting with the families, it was clear to me what we had to do to make this right for them, for Yahoo and for the future,” Yang said in a statement that tried a bit too hard to cast the company’s decision to settle as a humanitarian one. “Yahoo was founded on the idea that the free exchange of information can fundamentally change how people lead their lives, conduct their business and interact with their governments. We are committed to making sure our actions match our values around the world.”

… And putting this long legal and public-relations nightmare to an end.

If you think our witnesses today are uncomfortable sitting in this climate-controlled room and accounting for their company’s spineless and irresponsible actions, imagine how life is for Shi Tao, spending 10 long years in a Chinese dungeon for exchanging information publicly–exactly what Yahoo claims to support in places like China.”

–Statement of Rep. Tom Lantos (D., Calif.), chairman of the House Committee on Foreign Affairs, yesterday

Yahoo CEO Jerry Yang celebrated his 39th birthday yesterday with a public shaming before the House Foreign Affairs Committee. During a hearing to discuss Yahoo’s cooperation with the Chinese authorities, Yang and Yahoo General Counsel Michael Callahan were pilloried for misleading lawmakers last year about the company’s role in the investigation and imprisonment of dissident Chinese journalist Shi Tao.

Seems the committee didn’t quite buy Yahoo’s it-was-the-poorly-translated-document’s-fault story. “While technologically and financially you are giants, morally you are pygmies,” said Committee Chairman Lantos. “Yahoo claims that this is just one big misunderstanding. Let me be clear–this was no misunderstanding. This was inexcusably negligent behavior at best, and deliberately deceptive behavior at worst. … Look into your own soul, and see the damage you have done to an innocent human being and his family. It will make no difference to the committee what you do, but it will make you better human beings, if you recognize your own responsibility for the enormous damage your policies have created.”

Seated in front of Shi’s weeping mother, Yang had little choice but to do just that. “I deeply regret the consequences of what the Chinese government has done,” Yang said. “My heart goes out to the family. … I want to say we are committed to doing what we can to secure their freedom. And I want to personally apologize for what they are going through.”

Yang, however, made no promises to provide financial assistance to Shi’s family for what happened.

It had to run afoul of the language barrier sometime, right? It’s just a shame that when it did, Chinese journalist Shi Tao ended up in prison as a result.

Yahoo General Counsel Michael Callahan apologized yesterday to the House Foreign Relations Committee for failing to tell U.S. lawmakers that Yahoo knew more about China’s crackdown on online dissidents than he initially acknowledged in testimony last year. “Months after I testified before two House subcommittees on Yahoo’s approach to business in China, I realized Yahoo had additional information about a 2004 order issued by the Chinese government seeking information about a Yahoo China user,” Callahan said. “I neglected to directly alert the committee of this new information, and that oversight led to a misunderstanding that I deeply regret and have apologized to the committee for creating.”

That oversight, incidentally, meant that Callahan’s testimony of Feb. 16, 2006, was allowed to stand. And that went something like this:

The Shi Tao case raises profound and troubling questions about basic human rights. Nevertheless, it is important to lay out the facts. When Yahoo China in Beijing was required to provide information about the user, who we later learned was Shi Tao, we had no information about the nature of the investigation. Indeed, we were unaware of the particular facts surrounding the case until the news story emerged.

“Let me take this opportunity to correct inaccurate reports that Yahoo Hong Kong gave information to the Chinese government. This is absolutely untrue. Yahoo Hong Kong was not involved in any disclosure of information about Mr. Shi to the Chinese government. In this case, the Chinese government ordered Yahoo China to provide user information, and Yahoo China complied with Chinese law. To be clear–Yahoo China and Yahoo Hong Kong have always operated independently of one another. There was not then, nor is there today, any exchange of user information between Yahoo Hong Kong and Yahoo China.”

Quite an oversight.

So, assuming for the moment that this is an honest account of what happened, how did it happen? Yahoo blames the incident on a lousy translation of the Chinese government’s order, which didn’t mention that its request for user information involved an investigation into state secrets. Mea culpa, eh, Yahoo?

It is more important for us to participate, not only for economic reasons, but to be able to [help shape where the industry is going]. You have to balance the risk of not participating. And people don’t realize that being in the market every day there, and being on the ground, we are seeing changes, on the whole, for the positive.”
–-Yahoo co-founder Jerry Yang on China, March 2006

Sure, Yahoo signed China’s “Public Pledge on Self-Discipline for the Chinese Internet Industry,” a voluntary agreement to monitor and restrict information deemed “harmful” by Beijing, but did it have to take it quite so seriously? Was it really necessary to divulge the identity of a Chinese journalist who was subsequently arrested and sent to prison for a decade? Can’t Yahoo do business in China without helping its government jail political dissidents (three at last count)?

We may never get a staight answer to those questions, but at least they’re being asked. The House Foreign Affairs Committee has ordered an investigation into Yahoo’s role in the prosecution of Shi Tao, a journalist and Yahoo Mail user, who was arrested in 2004 by Chinese officials after Yahoo cooperated with their request for information. The committee’s interest in the matter was sparked by new documents that suggest Yahoo gave information to Chinese authorities knowing that it could lead to the reporter’s arrest. An interesting revelation, as Yahoo has long maintained it had no information about the nature of the investigation.

“This new documentation suggests that Yahoo’s Beijing office was at least aware of the general nature of the crime being investigated in the Shi Tao case even if it was unaware of the specific circumstances or the name of the individual involved,” said Joshua Rosenzweig of the Dui Hua Foundation, a human-rights organization. “One does not have to be an expert in Chinese law to know that ‘state secrets’ charges have often been used to punish political dissent in China. We must remember that before Shi Tao there were three other Chinese dissidents about whom Chinese police obtained user information from Yahoo in Beijing. If we assume that law-enforcement agencies investigating these cases followed the same procedures to obtain that information, three other notices would have been provided specifying investigations into subversion or incitement–crimes of a more unambiguous political nature.”

A scathing indictment and one that may mean Yahoo is finally called to answer for its conduct in China. “It is bad enough that a wealthy American company would willingly supply Chinese police the means to hunt a man down for shedding light on repression in China,” said Tom Lantos, the Democratic chairman of the House Foreign Affairs Committee. “Covering up such a despicable practice when Congress seeks an explanation is a serious offense. For a firm engaged in the information industry, Yahoo sure has a lot of secrecy to answer for. We expect to learn the truth, and to hold the company to account.”