The chief executive of Luckin Coffee, a chain rivalling Starbucks in China, and another top executive have been sacked in the wake of a massive fraud scandal that has rocked the company.
Jenny Zhiya Qian, the CEO, and chief operating officer Liu Jian were terminated from their positions as part of an internal investigation into fabricated transactions, Luckin Coffee said in a statement on Tuesday.
The board of directors made the decision after a special committee conducting the probe brought “evidence that sheds more light on the fabricated transactions,” it said.
Both also resigned from the board.
The group had revealed last month that Liu may have faked 2.2 billion yuan ($310 million) worth of sales in 2019.
The disclosure caused the company’s shares to sink by more than 70 percent in the NASDAQ stock exchange in New York. Trading in Luckin shares has been suspended ever since.
Liu and several collaborators had been suspended pending the outcome of the investigation.
Luckin named Jinyi Guo, a board member and senior vice president, as acting CEO.
The company said it will “continue to cooperate with the internal investigation and focus on growing its business under the leadership of the board and current senior management.”
Launched in 2017, the Chinese coffee chain made a remarkable debut on Wall Street in May 2019, raising US$561 million during its IPO. Shares soared by more than 50 percent during initial trading.
The coffee start-up had aimed to dethrone Starbucks in China by pursuing an aggressive growth strategy, enticing customers with an app-based purchasing model which prioritised takeaway and delivery options, and generous mobile coupons.
By the end of 2019, the Xiamen-headquartered chain’s 4,500 outlets in mainland China had already surpassed Starbucks’ 4,300 stores, and investors touted the company’s potential to go global.