Clarification on fraudster does little to stop Chinese electric carmaker BYD’s shares from taking a hit

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BYD cars are parked at the company’s headquarters in Shenzhen, China. The company shares fell on Monday despite clarification that it was not involved in any fraud involving Li Juan and her conspirator Chen Zhenyu. Photo: Bloomberg

Published: 9:43pm, 16 Jul 2018Updated: 9:43pm, 16 Jul 2018

Shares of BYD plunged as much as 6.3 per cent even after the Chinese electric carmaker’s clarification that it played no role in illegal dealings by a fraudster who illegally entered into transactions that damaged its reputation.

In a filing to Hong Kong stock exchange on Monday, the Shenzhen-based company said Li Juan and her conspirator Chen Zhenyu were not its employees, directors or senior managers, and the company did not authorise them to conduct business in its name or sign contracts on behalf of it.

It followed a statement published last Thursday on BYD’s website, which said Li and her conspirators had used the name Shanghai Yuhong Culture Communication to provide free advertising and promotion activities, after getting in contact with the carmaker as early as May last year.

In April this year, Li, operating under Yuhong, had offered free and discounted advertising that involved BYD and Arsenal Football Club, the statement added without giving details how the ads worked and BYD’s involvement.

BYD claims that Li Juan (left) was not authorised to conduct business in its name or sign contracts on behalf of it, claiming that she was not an employee. Here she is seen signing an advertising deal with Arsenal Football Club in April. Photo: Weibo

Since late May, BYD said it has been receiving queries from external parties seeking information about Li, who, upon BYD’s investigation, had claimed to be a marketing manager of a company called Shanghai BYD Electric Car.

Li had also used an email address with the domain name “@sh-byd.com” which is similar to the company’s domain name “@byd.com”, and signed advertising cooperation deals with multiple parties in BYD’s name using a fake company seal.