We return to the issue of Evony, the online multiplayer game. You'll recall our story - Has Evony become the most despised company on the web? - which looked at how the game (free to join, potentially expensive to play) had annoyed a number of people because people had spammed links to it on blogs, the advertising seemed misleading (there are no large heaving boobs in the game) and when it was still called Civony (in May 2009), some of the images in the advertising were actually taken from other sources without acknowledgement.
Bruce Everiss, a 30-year veteran of the UK games industry, has posted a series of blogposts on his bruceongames.com site since last summer in which he has claimed that Evony, the game, previously had links to a Chinese company, UMGE, and that that was linked to a Chinese "gold farming" business – which gets low-paid workers to earn virtual money in online games such as World of Warcraft, and then sells it (against WoW's rules) to other players. (Puzzled about gold farming? We went inside a company that does it.)
Everiss has also detailed connections between UMGE and a company being sued by Microsoft for alleged click fraud on search engine adverts. (The New York Times detailed how a man called Eric Lam was accused of involvement in a scheme involving WoW and vehicle insurance ads. Evony LLC has previously told the Guardian that neither the company nor its owners were associated with internet fraud or scams.)
Evony, a company registered in Delaware in the US on 22 July 2009, then sued Everiss for libel over postings he had made since 10 July. Strangely, it chose to sue him in Australia. However its case came unstuck within two days of court proceedings and it abandoned it.
That left Evony on the hook for defence costs totalling A$114,000 (£68,800); a payment was lodged with Everiss's solicitors today, 12 April, meaning that there are only small procedural matters to be dealt with and Everiss's pain is over.
But there's plenty more that's interesting - and unanswered - about Evony. At the same time as abandoning the case in Australia, it hired a PR company in the US, which introduced itself by saying that "We rather recently began working with the folks at Evony, with the goal of helping them better communicate - something they acknowledge hasn't been their strong suit, so to speak."
Might it help if Evony's corporate structure were less opaque? Here's how it appears to be set up:
1) Evony LLC, registered in Delaware, US (which is very helpful to anyone who doesn't want anyone to know much about their company: it's famed as a low-tax, low-transparency place to register companies). Evony LLC says it is the owner of Evony, the game. It is believed that it also employs some developers and a lawyer in Boston. Its sole shareholder and director appears to be a woman called Lu Lu, who we'll have more detail on in a moment.
2) Regan Mercantile LLC. Also registered in Delaware. The connection? While Evony LLC provides the game, its terms and conditions show that it's Regan Mercantile LLC which provides the "service". But stay tuned.
3) Regan Mercantile (Hong Kong). Registered in Hong Kong. Its director is the self-same Lu Lu: the identification provided for the registration is a Chinese passport number and an address inside China. Its sole shareholder is a company – Regan Mercantile Limited, registered in the Marshall Islands.
Here's the strange thing: despite item (2) above, Everiss has evidence that payments made in the Evony game actually go to Regan Mercantile HK.
So we have a game company registered in a secretive location (almost a tax haven inside the US) which says that it has its "service" (the gameplay) provided by another company registered in the same place, but when you pay money to it, it goes to a Hong Kong company. So Evony doesn't appear to receive any money itself - it all goes to Regan Mercantile HK or Regan Mercantile LLC. Or perhaps that third company, Regan Mercantile Ltd - the one registered in the Marshall Islands, which really is a tax haven: no banking transparency, no company transparency.
So we asked Evony's PR company a few questions. They passed those on to Benjamin Gifford, who testified in the court case on Evony's behalf. (We'll come to his testimony presently.)
1) Why does Evony remit all its money to Regan Mercantile? Which company is actually paying you?
Gifford:
Evony is the developer and rights holder to the IP of the "Evony" games. Regan Mercantile, LLC is the operator of the game. The shareholders are identical in both entities; that doesn't mean it's conspiratorial. Both Evony, LLC and Regan Mercantile, LLC pay taxes in the USA. Delaware is by far the most beneficial state to organize a corporation in the US and there is a reason why more than 50% of publicly-traded companies in the US, and 63% of the Fortune 500 organize there - it's good business practice.
2) What's David Guo's involvement with Evony and with Regan Mercantile?
Gifford:
David Guo is the Development Director for Regan Mercantile, LLC. His background includes developing software and firewalls to protect people from hackers.
3) Who, precisely, is Lu Lu, and is it true that she is related to a Chinese government official?
Gifford:
Lu Lu is the director of Regan Mercantile, LLC and a successful businesswoman. Her right to privacy should be respected and we at Regan Mercantile LLC and Evony LLC suspect that if she were Scottish, wild accusations wouldn't be flying, and we're not going to discuss her role with the company any further. Corporate innards like this have been an unfortunate distraction from the most successful free to play game online, and both Evony, LLC and Regan Mercantile, LLC hope attention will turn to the game that 16 million people have enjoyed. Both Evony, LLC and Regan Mercantile, LLC shareholders have relatives: neither of the companies has experienced any interference from any shareholder's relative so until they do, they wouldn't investigate whether a relative of anyone is one of the one million plus Chinese government officials or someone else.
4) What is the reason for a company set up by someone who lives in Hong Kong, whose development team is in China, whose registration is in Delaware, to send funds elsewhere? If Evony is an American company, why doesn't it remit its funds to a US bank account? If it's a Hong Kong company, why doesn't it remit its funds to a HK bank account? If it's a Chinese company, why doesn't it remit to a Chinese bank account?
Gifford:
Evony, LLC and Regan Mercantile, LLC are privately held limited liability companies.
But we did have another question:
5) Does Regan Mercantile remit all its money to Regan Mercantile Ltd in the Marshall Islands?
(The Marshall Islands hides the identities of bank accounts owners - which is the sort of thing that anyone looking to shelter money would love.)
Gifford didn't answer that.
But let's look briefly at Gifford. As Ars Technica points out that he didn't cover himself in glory in the witness box. (There's a long article there in which Evony responds to an investigative piece by the site.)
The transcript shows how Gifford had to reverse his claimed ownership of a BA and MBA: questioned by the judge, the conversation went thus:
Q. It is not a PR tool, it is a lie?
A. Yes, your Honour.
(Note: it's not a good thing when the judge gets you to admit to having lied on documents before the court.)
Ars Technica takes a rosy view of Evony:
"In an effort to ditch the unpleasant stereotypes and rumors surrounding it, Evony seems like it's headed in the right direction. Employing respectable industry veterans [Walt Yarbrough, a former Electronic Arts producer], getting rid of those trashy ads, increasing transparency about its business practices, and moving away from a truly ugly lawsuit as fast as possible are all good moves."
We don't have such a positive view of Evony - partly because its corporate structure, and the funnelling of money to unexamined bank accounts in countries which practice bank secrecy doesn't seem like good corporate practice to us. Questions remain - especially about the role and influence of David Guo.
And finally, one other fascinating question. On its website, Evony claims that "Evony: Age II is played by 20 million players in over 167 countries." It's that "over 167", which is fascinating both in its precision and its vagueness, that we like. Given that there are reckoned to be 195 countries on earth, here's your supplementary: which countries isn't Evony played in? Or should we take those claims of the number of countries - and perhaps therefore the number of players - with a pinch of salt?
Especially because, as you'll have noticed in the answer from Gifford, which came just last week, that he only seems to be claiming 16m players. Has it put on 4m extra in the few days since he emailed on 8 April? That's 25% growth in four days. We think we should be told.
