The defendants were sentenced to six, seven and 12 years of prison time. They plan to appeal against the decision to a higher court, the source said.

The conviction comes after a local procuratorate in February sued the three for contract fraud. According to the procuratorate’s notice, the three pretended to be employees of Lao Gan Ma, a beloved chilli sauce brand, and tricked Tencent into signing contracts to obtain huge benefits from the Hong Kong-listed tech giant.

Tencent’s dispute with Lao Gan Ma first caught the public attention as early as 2020, when a published ruling showed that the tech titan had sued the chilli sauce company for unpaid advertisement fees and applied to a court to freeze around 16.2 million yuan (US$2.3 million) worth of Lao Gan Ma’s assets.

In response, Lao Gan Ma denied engaging in any commercial cooperation with the tech giant.

After that, a notice published by the police in Guiyang — the provincial capital of Guizhou, where Lao Gan Ma is headquartered — revealed that the three people had forged the chilli sauce company’s seals and signed the contracts with Tencent.

Their goal was to obtain gaming activation codes that Tencent distributed alongside the advertisements and resell them for profit, the police said.

Tencent dropped the case against Lao Gan Ma in July 2020, and a month later the local procuratorate in Guizhou issued arrest warrants for the three suspects.

Chinese netizens promptly debated the case, ensuring the dispute went viral online, with observers arguing over many suspicious points. For one, it reflected perceived weaknesses of Tencent’s internal management system.

In the wake of the scandal, Tencent has already withdrawn the independent advertising rights from its gaming branch — the unit responsible for signing the contracts with the three defendants — and some staff members involved were investigated and transferred internally as a result, sources close to the company said.