Am I the only person that really doesn't see the problem here?

The problem is, he violated the company's trust by sending sensitive information to unauthorized third parties.

Bingo. He also most likely exposed additional valuable and proprietary IP to a third party that a) has no formal business relationship with the company and b) operates in a country notorious for IP theft.

Firing him is a no-brainer here, if this story is even true.

EDIT: he also opened a large portion of the company's codebase to potential sabotage. If I was in Company X's shoes right now I'd be doing a full audit of everything this joker has touched since he started, in addition to a full internal security audit of everything this mystery third party had access to. This kind of security breach is a Big Deal.

But he would have had those companies sign an NDA (in theory) so they are in effect umbrella'd into his.

If ndas worked that way there'd be no point in ndas.

I also REALLY don't see a problem with this... I would have given him a raise and more work to outsource rather than giving the boot.

Problem: he didn't have a manager title. If he did, he would probably have been promoted.

No one talked about whether he lied about his skills and the quality of work he oversaw.

he is probably over qualified old man

not a lawyer, but you could probably make a case for fraud.

Seriously. Managing Chinese contractors is hard work!