Luckin Coffee’s founder says sorry as Nasdaq prepares to kick out his stock for fraud, in the first expulsion of a Chinese company
- The decision was based on ‘public interest concerns’ over fabricated transactions recently disclosed by Luckin, as well as its past failures to publicly disclose information
- The scandal has undermined confidence in the accounting practices and financial reporting of Chinese companies listed abroad
The chairman of Luckin Coffee, touted as China’s answer to Starbucks, apologised over its US$310 million accounting fraud, which has led New York’s Nasdaq stock exchange to move to delist the company amid waning market trust in Chinese financial reporting.
Charles Lu Zhengyao, an angel investor and serial entrepreneur, said he is “deeply disappointed and regret” the delisting decision, which the Nasdaq exchange said was based on public interest concerns over recently disclosed fabricated transactions by company staff that amounted to 2.2 billion yuan (US$310 million).
“I have been in deep pain and guilt over the past month,” said Lu in a statement published on Chinese social media platform WeChat on Wednesday. “I again apologise to all the investors, staff and clients of Luckin for the terrible impact of the incident.”
Lu, who also founded China's largest car rental company Car Inc, said he never intended to defraud investors and only wanted to build good companies and create value for society. Shares of Hong Kong-traded Car, which was not implicated in the Luckin scandal, have fallen by 52 per cent since the coffee retailer’s accounting fraud was disclosed on April 1.
Lu, who holds a master's degree in business administration from Peking University, said he has put almost all of his money, including loans he took out by pledging his shares in Luckin, into supporting his companies, and never squandered it away for personal enjoyment, according to his statement.
