Luckin Coffee sacks CEO and COO after sales fraud

The sales amount associated with the fraud hit $310m.

China-based Luckin Coffee has terminated Jenny Zhiya Qian and Jian Liu as CEO and COO, respectively, starting 11 May following evidence from investigations of fabricated transactions in the company, according to a press release.

In place, the company has appointed Jinyi Guo, a director to the board and a senior vice president of the company, as the acting CEO, and Wenbao Cao and Gang Wu as directors to the board.

In addition, since the beginning of the Internal Investigation, the company has placed six other employees, who were involved in or had the knowledge of the fabricated transactions, on suspension or leave.

The company announced on 2 April that its special committee learned that Liu and several employees reporting to him had engaged in misconduct, including fabricating certain transactions, since Q2 2019.

It was preliminarily found that the aggregate sales amount associated with the fabricated transactions from Q2 2019 to Q4 2019 hit $310m (RMB2.2b). Certain costs and expenses were also substantially inflated by fabricated transactions during this period.