LeEco’s Jia stays in US chasing his electric car dream, leaving wife and brother to handle crumbling empire
Jia admits he has “paid full attention” to notice issued by Beijing Securities Regulatory Bureau to return to China, but insists to ensure the delivery of the FF91 electric car he has to remain stateside
Jia Yueting, the troubled LeEco entrepreneur, is prolonging his stay in the US, after missing the deadline set by a city securities regulator which ordered him to return China before the end of 2017.
In a personal message sent Tuesday morning on his WeChat account, replying to an order made last week by the Beijing Securities Regulatory Bureau, Jia said he had asked his wife and younger brother to represent him handling regulatory questions on billions of debt back in China, but that he would “do everything he could to solve any debt problems with both the listed and unlisted companies”, from the US.
Lawyers say the authorities have limited power to force Jia to return China, although a growing list of creditors are desperately waiting to be paid.
“I have paid full attention to the notice issued by the regulator...but there is a lot of work that needs done (in the States), to guarantee volume production and to ensure the delivery of the FF91,” referring to a luxury electric vehicle (EV) that LeEco is developing with Faraday Future, a US-based tech company Jia controls.
Jia, who once famously claimed he was set to challenge Apple and Tesla with his disruptive business ecosystem.
“To better solve the debt problem, I have entrusted Gan Wei (his wife) and Jia Yuemin (his younger brother) to act as my sole agent to exercise shareholders’ rights and responsibilities, including asset disposals and other related work,” he said.
Jia left China for the US to “focus on his electric car dream” in March.
But his flagship company LeEco Group, founded in 2004 which mushroomed from an online video website into a conglomerate sprawling from smartphone to electric cars, has been struggling for cash, with the founder even admitting publicly it has overstretched itself financially.
Sunac China, the property group founded by Sun Hongbin, emerged as a white knight when Sun paid 15 billion yuan (US$2.3 billion) to buy stakes in Leshi and LeEco’s other subsidiaries in January.
But by July, banks were given court approval to freeze three unlisted companies controlled by the Jia couple, and their family assets, together worth more than 1.2 billion yuan.
Leshi internet Information & Technology, the listed arm of LeEco which focuses on online video business, which is believed to have had a 60 billion yuan valuation, has also been under trading suspension since mid April, pending a restructuring application.
Jia resigned as chairman of Leshi to hand over the position to Sun, but remains controlling shareholder.
In early December, Jia was placed on China’s official blacklist of debt defaulters, after he failed to pay back more than 762 million yuan to two securities companies.
In late December, LeEco’s Hong Kong branch – which provided on demand online content services for Hong Kong residents – filed for liquidation at the High Court.
Despite the Beijing securities bureau’s warning letter last week, China’s highest securities watchdog, however, the China Securities Regulatory Commission (CSRC) has yet to launch any formal investigation into Jia, or Leshi.
“The CSRC is cautious about starting such an investigation because Leshi used to be the hottest tech chip in China and has absorbed investment from 200,000 retail investors,” said Liu Guohua, a lawyer with Benben Law Firm, based in Guangzhou.
“Even if a formal case can be set up by the CSRC, it has no legal power to repatriate Jia from the US. If he is charged with more serious criminal charges and his case transferred to the public securities authority, it would be still challenging to repatriate him, due to lack of extradition arrangements between China and the States,” he added.
Beijing Securities Regulatory Bureau issued a notice last week, urged Jia to return to China by December 31, as he should fulfil responsibility as a listed company’s controller, stabilise the firm’s situation, and protect the interests of shareholders.