JD.com’s billionaire founder back in China after alleged sexual misconduct in US
JD.com is China’s largest e-commerce company after Alibaba Group, backed by Tencent Holdings, Walmart and Google
Beijing — JD.com’s billionaire founder returned to China after his weekend arrest for alleged sexual misconduct in Minnesota, where local police are investigating the CEO of one of the Asian country’s largest internet corporations.
Liu Qiangdong, who uses the English name Richard Liu, is a doctoral student at the University of Minnesota and was in Minneapolis for his studies, the college confirmed. The case involves a Chinese student at the school, according to the Financial Times and the Star-Tribune.
Liu was brought in at 11.32p on Friday on an accusation of "criminal sexual conduct" and released just more than 16 hours later, according to arrest records. Minneapolis police department spokesperson John Elder declined to provide further details about the reasons for the arrest, but said authorities decided not to keep Liu in custody and haven’t imposed any travel restrictions while conducting their investigation.
JD.com is China’s largest e-commerce company after Alibaba Group, backed by investors including social media titan Tencent Holdings, Walmart and Alphabet’s Google. Liu has led the $45bn business since its founding and controls the company through special voting rights.
"We are very much in the infancy of this investigation," Elder said. Authorities may decide not to charge Liu at all, he added. "There are no travel restrictions on him at the moment and he’s not charged with a crime at this time."
Back in China
The billionaire has since flown back to China. JD earlier said on its official Weibo social media account that US police found no misconduct in their probe against Liu. It didn’t explain how that assertion squared with the police statement about an ongoing investigation. In the Weibo post, the company had said Liu will continue a scheduled business trip.
Police haven’t outlined the accusations against Liu, said his attorney Joseph Friedberg. The lawyer, who JD confirmed as representing the billionaire, said Liu was neither questioned nor told why he was under arrest. Police can hold a suspect for up to 48 hours without charges over a holiday weekend, he said. But Elder, the police spokesman, said it was "absolutely" standard practice to tell people what they were accused of when arrested.
"I find it to be preposterous," he said of the claim that Liu had not been informed of accusations against him. "However, if there is a concern about the way our officers behaved we certainly would encourage them to exercise their client’s right to file a complaint about it."
Friedberg, who said Liu appeared confused during a brief meeting, couldn’t confirm that the case involved a Chinese student at the university. Liu is registered as a student at the University of Minnesota’s Carlson School of Management in its doctor of business administration programme. Participants were in town from August 26 until Saturday as part of their residency, a spokesperson for the college said.
"I’m very confident there will be no criminal charges," Friedberg said. "They realised that this whole thing was ridiculous and they turned him loose. They didn’t ask for his passport, they didn’t ask for any bail. You can take that as gospel." Elder said, however, that the lack of bail or travel restrictions had no bearing on the potential seriousness of the charge.
Investors tread warily
JD’s American depositary receipts won’t trade in the US until Tuesday because of the Labor Day holiday. Spreads on the company’s dollar bonds widened at least three basis points on Monday, according to Asia-based traders.
"Investors may treat the stock cautiously for the next short while as they wait to see how this issue is resolved," said Mark Natkin, MD of Beijing-based Marbridge Consulting. "But I suspect it will likely not come to much and that it won’t have any major long-term impact on the stock."
Earlier this year, a guest at a party Liu hosted in downtown Sydney was convicted of sexually assaulting a fellow guest after the event. There was no accusation of any misconduct by Liu, but he lost a legal attempt to keep his name out of the records. Over the weekend, JD said it will take legal action against the publishing of untrue reports or rumours.
Investors may treat the stock cautiously for the next short while as they wait to see how this issue is resolved ... but I suspect it will likely not come to much and that it won’t have any major long-term impact on the stock ~ Mark Natkin
Liu became one of China’s best-known self-made billionaires by turning a chain of electronics goods stores into an online powerhouse selling everything from mobile gadgets to fresh seafood. It’s Walmart’s partner in the country and its largest shareholder is WeChat operator and games giant Tencent. The CEO has amassed a fortune of about $7.3bn, according to the Bloomberg Billionaires’ Index.
His wife Zhang Zetian is famous in China in her own right with 1.5-million followers on Weibo. She was dubbed "Sister Milk Tea" after a photo of her holding the drink went viral on social media in the country.
Liu’s JD has started pushing into physical stores and the billionaire speaks openly about his longer-term goal of expanding internationally, though its incursions overseas have so far mostly been limited to Thailand, Indonesia and Vietnam. Liu has his eyes on the affluent consumers of Europe and the US as he makes substantial investments in the infrastructure needed to supply millions of customers around the world.
His high-spending strategy has drawn criticism from investors who would prefer it remain focused at home. JD’s share price hit a record high in January only to tumble since then after failing to deliver the full-year profit many analysts had expected. In the June quarter alone, the company had a net loss of ¥2.2bn ($322m).
With Edwin Chan