Spat With Car-Hailing Boss Adds to Billionaire Jia's ChallengesBloomberg News
Dispute about funds playing out on Chinese social media
LeEco denies Zhou Hang claims it misappropriated money
Chinese billionaire Jia Yueting probably has enough on his plate right now as he fights to save his technology empire amid a cash squeeze. Now he is contending with a top executive using social media to make accusations against his company LeEco.
Zhou Hang, founder and chief executive officer of the Yidao Yongche ride-hailing service, used China’s biggest social media platform to say LeEco misappropriated 1.3 billion yuan ($189 million) meant for the business since it bought a majority stake in 2015. LeEco has denied the claims and said it has actually invested money into it.
LeEco’s spat with Zhou adds to challenges facing Jia as he tries to rein in a sprawling group that also spans electric cars, smartphones and video streaming amid a cash squeeze after expanding too quickly. Plans to buy TV maker Vizio Inc. fell apart this month and the company is said to have lost its global head of corporate finance and delayed paying U.S. workers.
“As far as I know, Yidao right now faces capital issues. And the most direct cause of this issue is LeEco taking Yidao’s 1.3 billion yuan,” Zhou said in a post.
In a joint statement, Yidao and LeEco said 4 billion yuan had been invested into the company and a board meeting would be held to consider legal action. They also said that while a 1.4 billion yuan loan had been taken out using Yidao as collateral, 1.3 billion yuan of that was earmarked for use by other LeEco car-related companies with Zhou’s knowledge. Yidao is a distant second in China’s ride-hailing market to Didi Chuxing, the company that drove Uber Technologies Inc. out of the country.
“This is the modern version of the farmer and the snake,” Yidao and LeEco said in their statement, referring to a parable where a human nursing a snake back to health still ends up getting bitten. “It’s infuriating.”
Zhou didn’t respond to requests for further comment from Bloomberg News. Yidao said Tuesday that Zhou is still the CEO.
As the fight with Zhou plays out, Jia’s main publicly traded entity is undertaking a restructuring review.
Leshi Internet Information & Technology Corp., a Netflix-like streaming video service, got its stock halted from trade pending the review. Last week it warned of a potential fall in earnings as the cash crunch impacted sales in January and February.
Jia is the biggest shareholder in Leshi, according to data compiled by Bloomberg, and has used his stake to raise funds for LeEco.
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