Arrest of JD.com's billionaire founder Liu Qiangdong connected to suspected rape

File photo of Mr Richard Liu at a France-Chinese forum on the applications of artificial intelligence at SOHO 3Q in Beijing, China, on Jan 9, 2018.
File photo of Mr Richard Liu at a France-Chinese forum on the applications of artificial intelligence at SOHO 3Q in Beijing, China, on Jan 9, 2018. PHOTO: REUTERS

BEIJING (BLOOMBERG) - JD.com's billionaire founder is under investigation for a suspected rape in a weekend incident that led to his arrest in Minnesota, local police say.

Mr Liu Qiangdong, who uses the English name Richard, is a doctoral student at the University of Minnesota, and was in Minneapolis for his studies, the college confirmed. The case involves a Chinese student at the school, according to the Financial Times and the Star-Tribune.

Mr Liu was brought in at 11.32pm on Aug 31 on an accusation of "criminal sexual conduct" and released just more than 16 hours later, according to arrest records. Minneapolis Police Department spokesman John Elder said the case is being investigated as a rape, but the authorities decided not to keep Mr Liu in custody and haven't imposed any travel restrictions while conducting their investigation.

Police responded to a location last Friday night, found Mr Liu and another individual, took photos and arrested the CEO, Mr Elder said. Police declined to specify the location.

Mr Liu, 45, returned to China after his release and was at work on Tuesday at JD.com, the country's largest e-commerce company after Alibaba Group Holding. The business is backed by investors including social media titan Tencent Holdings, Walmart and Alphabet Inc's Google. Mr Liu has led the US$42 billion (S$58 billion) company since its founding and controls it through special voting rights.

Police have the authority to hold a suspect for 36 hours, not including Sundays and holidays, without a charge, but if the investigation is expected to take longer, they can release a suspect earlier, Mr Elder said. Police are confident they can reach Mr Liu when necessary, he added.

"We are very much in the infancy of this investigation," Mr Elder said. The authorities may decide not to charge Mr Liu at all, he added.

JD earlier said on its official Weibo social media account that US police found no misconduct in their probe against Mr Liu. It didn't explain how that assertion squared with the police statement about an ongoing investigation. In the Weibo post, the company had said Mr Liu will continue a scheduled business trip.

Police haven't outlined the accusations against Mr Liu, said his attorney Joseph Friedberg. The lawyer, who JD confirmed as representing the billionaire, said Mr Liu was neither questioned nor told why he was under arrest. Mr Elder said it was "absolutely" standard practice to tell people what they were accused of when arrested.

 
 
 

"I find it to be preposterous," he said of the claim that Mr Liu had not been informed of accusations against him. "However, if there is a concern about the way our officers behaved we certainly would encourage them to exercise their client's right to file a complaint about it."

Mr Friedberg, who said Mr Liu appeared confused during a brief meeting, couldn't confirm that the case involved a Chinese student at the university. Mr Liu is registered as a student at the University of Minnesota's Carlson School of Management in its Doctor of Business Administration programme. Participants were in town from Aug 26 through last Saturday as part of their residency, Ms Caitlin Hurley, a spokesman for the college, said. Mr Liu remains registered at the university, according to Ms Hurley.

"I'm very confident that there will be no criminal charges," Mr Friedberg said. "They realised that this whole thing was ridiculous and they turned him loose. They didn't ask for his passport, they didn't ask for any bail."

"You can take that as gospel," he added.

Mr Elder said, however, that the lack of bail or travel restrictions had no bearing on the potential seriousness of the charge.

JD's American depositary receipts declined 6 per cent to US$29.43 at the close on Tuesday in New York. Spreads on the company's dollar bonds widened at least three basis points Monday, according to Asia-based traders.

"Investors may treat the stock cautiously for the next short while as they wait to see how this issue is resolved," said Mr Mark Natkin, managing director of Beijing-based Marbridge Consulting. "But I suspect it will likely not come to much and that it won't have any major long-term impact on the stock."

Earlier this year, a guest at a party Mr Liu hosted in downtown Sydney was convicted of sexually assaulting a fellow guest after the event. There was no accusation of any misconduct by Mr Liu, but the billionaire lost a legal attempt to keep his name out of the records. Over the weekend, JD said it will take legal action against the publishing of untrue reports or rumours.

Mr Liu became one of China's best-known self-made billionaires by turning a chain of electronic goods stores into an online powerhouse selling everything from mobile gadgets to fresh seafood. It is Walmart's partner in the country and its largest shareholder is WeChat operator and games giant Tencent. The CEO has amassed a fortune of about US$7.3 billion, according to the Bloomberg Billionaires' Index.

His wife Zhang Zetian is famous in China in her own right, with 1.5 million followers on Weibo. She was dubbed "Sister Milk Tea" after a photo of her holding the drink went viral on social media in the country.

 

Mr Liu's JD has started pushing into physical stores, and the billionaire speaks openly about his longer-term goal of expanding internationally, though its incursions overseas have so far mostly been limited to Thailand, Indonesia and Vietnam. Mr Liu has his eye on the affluent consumers of Europe and the US as he makes substantial investments in the infrastructure needed to supply millions of customers around the world.

His high-spending strategy has drawn criticism from investors who would prefer it remain focused at home. JD's share price hit a record high in January only to tumble since then after failing to deliver the full-year profit many analysts had expected. In the June quarter alone, the company had a net loss of 2.2 billion yuan (S$442.4 million).