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Lawsuit against JD's Liu may tarnish firm

By Fan Feifei | China Daily | Updated: 2019-04-18 09:08
JD founder Liu Qiangdong attends an interview in Hong Kong, on June 9, 2017. [Photo/VCG]

The new lawsuit against Liu Qiangdong, the billionaire founder and CEO of Chinese e-commerce giant JD, and his company filed by a University of Minnesota student might further shake investors' confidence, and tarnish the image and reputation of the company, amid tougher competition from rivals such as Alibaba and Pinduoduo.

The Chinese student from University of Minnesota, who claimed she was raped last August by Liu, filed a civil lawsuit against him in Minneapolis on Tuesday, four months after prosecutors decided not to pursue a criminal case.

The lawsuit accused Liu and JD on six counts of false imprisonment, civil assault and battery, as well as sexual assault or battery, seeking damages in excess of $50,000, according to a report from Reuters.

The court filing said JD is "vicariously liable" for Liu's behavior as his alleged actions happened while he was "seemingly" at work-related activities, and the assault and battery began in the presence of two other JD employees.

"We have not yet reviewed the complaint and are not going to comment on pending litigation, but based on the Hennepin County Attorney's declination to charge a case against our client and our belief in his innocence, we feel strongly that this suit is without merit and will vigorously defend against it," Liu's attorney Jill Brisbois said in a written statement.

Peter Walsh, an attorney for JD, said in a statement while it was not prepared to comment at this time, the company would vigorously fight against these "meritless claims".

Lu Zhenwang, CEO of Shanghai-based Wanqing Consultancy, said: "The lawsuit against Liu will bring damages to the image and reputation of JD, have an impact on investors' confidence, and cause fluctuations in its share price. Moreover, employees' trust in the company may also be affected as the Beijing-based tech heavyweight is laying off staff to cut costs."

Shen Meng, director of boutique investment bank Chanson & Co, said Liu's case won't change his actual control over JD, which is now making some innovations to reassure investors. Liu owns 15.8 percent of JD's stock and controls nearly 80 percent of the company's voting rights.

Liu was detained in Minneapolis, Minnesota, on suspicion of criminal sexual conduct on Aug 31 and later released without charge or bail. He returned to China on Sept 3.

In December, Hennepin County Attorney's Office, the prosecutorial office handling the case announced that no sexual assault charges would be brought against Liu as prosecutors could not prove his guilt beyond reasonable doubt.

JD's stock tumbled after the student first accused Liu in August, and its shares have slowly crawled back since December. Hong Tao, an analyst from GF Securities, said the tech heavyweight has faced troubles. JD's advanced logistics system, which is its core strength, has been overtaken by Alibaba's Cainiao Logistics.

JD is in the spotlight as it is reducing salaries for its delivery staff and seeing a round of shake-ups in its management team. Its chief technology officer Zhang Chen, chief legal officer Long Yu, and chief public affairs officer Lan Ye, all announced their resignation within just one month.

The company said in February that it would lay off 10 percent of its senior executives above vice-president level this year.

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