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A Chinese internet company and its edge computing subsidiary have initiated a civil lawsuit against a former CEO who is currently residing overseas. They are seeking 200 million yuan (approximately USD 28.7 million) in compensation, alleging embezzlement spanning the past five years.
The case was filed in a court located in Shenzhen and also targets several former key members of the executive team, including a former senior vice president and a former human resources director. The lawsuit claims that their actions harmed the company’s interests. The court has accepted the case, according to someone familiar with the situation.
The former CEO joined the Shenzhen-based company as chief technology officer in 2014 and was promoted to CEO in 2017. He was dismissed in April 2020 amid suspicions of embezzlement, prompting local authorities to commence a criminal investigation. However, due to his prolonged stay abroad, investigators faced difficulties gathering evidence, leading to the criminal case being withdrawn at the end of 2022. The company’s move to pursue civil litigation now signifies a new chapter in this ongoing dispute.
Attempts to contact the former CEO today proved unsuccessful, as calls to his previous mobile numbers went unanswered, and his WeChat account was flagged as suspicious and did not accept messages.
The alleged embezzlement primarily involved transferring funds through a shadow company under his control, called Xingronghe Technology. An audit by new management in 2020 revealed that he approved approximately 170 million yuan in payments from the company to Xingronghe over the previous year, despite no actual transactions taking place.
Before his termination, he also arranged for certain employees to be poached from the company and transferred to Xingronghe, resulting in significant severance costs and stock buybacks, and leading to the departure of core staff.
Founded in 2003, the company originally provided download software and went public on the Nasdaq in 2014. In recent years, its focus has shifted toward cloud computing and blockchain services. After the CEO’s departure, an early partner returned to the firm and has since served as chairman and CEO.
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