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Anti-counterfeit group suspends Alibaba after a month

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An anti-counterfeit group suspended the membership of Alibaba Group Holding Ltd, one month after the Chinese Internet giant joined, after questions were raised about conflicts of interest involving the coalition's president and complaints from some members.

[NEW YORK] An anti-counterfeit group suspended the membership of Alibaba Group Holding Ltd, one month after the Chinese Internet giant joined, after questions were raised about conflicts of interest involving the coalition's president and complaints from some members.

The International AntiCounterfeiting Coalition, a nonprofit global organisation that fights counterfeit products and piracy, created a new membership category in April that allowed Alibaba to join. Alibaba is trying to shed its image as a haven for cheap brand knockoffs, but its inclusion in the group irked some members who say the company isn't going far enough to cull fakes from its online marketplaces.

The IACC board said conflicts of interest involving President Bob Barchiesi were not communicated to directors, due to a "weakness in our corporate governance procedures."

As a result of concerns raised by members, IACC is putting on hold the new membership classification to allow "further discussion and consideration," according to a letter from the IACC board. Wish.com and The RealReal, two other e-commerce members under the new classification, were also suspended.

Earlier Friday, the Associated Press reported that Barchiesi held Alibaba stock, had close ties to a company executive and had used family members to help run the coalition.

The IACC board said Mr Barchiesi disclosed his financial transactions and relationships, however the board was not told about "certain aspects" of his "disclosed conflict." The group said it's hiring an independent firm to review its corporate governance and implement new measures, according to the letter, which came out after the AP report.

"My investments are completely independent from my work in anti-counterfeiting," Mr Barchiesi wrote in an email forwarded by an IACC representative to Bloomberg News. "The stock represents a small percentage of my investment portfolio. I also have shares in companies that happen to be a member of the IACC."

Most of the IACC's members are prominent apparel, electronics and luxury goods brands including Nike Inc, Apple Inc and Rolex Group.

Alibaba spokeswoman Jennifer Kuperman said the company will continue to work with the group to fight counterfeits whether it is a member or not, and will expedite efforts to remove products identified as fake.

"The only way to solve the complex, industrywide issue of counterfeiting is through strong industry collaboration, and we believe that intermediaries, like Alibaba, must be an integral part of the solution," she said.

Alibaba reaches more than 400 million online shoppers in China, mostly through its Tmall and Taobao sites. The broad reach makes it a place where counterfeits - everything from headphones to designer purses and sports memorabilia - can flourish.

BLOOMBERG