More scandals erupt at China’s Luckin Coffee (OTC: LKNCY). This time, the coffee chain’s executives are calling for the dismissal of its chief executive officer, Jinyi Guo.
A letter was signed by seven vice presidents, along with dozens of others, accusing Guo of “corruption, abuse of power to eradicate dissidents, and low capability to run the company,” Chinese media outlet Pandaily reports.
In response, Guo wrote an internal memo to staff, claiming that the allegations were forged by former chairman Charles Zhengyao Lu and former CEO Jenny Zhiya Qian, who were both given the boot in May after the fraud scandal that led to Luckin's delisting. Guo also claimed that some employees were not aware of all the details and were forced to sign the letter.
“I personally asked the board of directors to set up an investigation team as soon as possible to probe into the incident and restore the truth,” Guo said, as cited by Pandaily.
He added, “I have also assured the board that I won’t interfere with the investigation, and I have a clear conscience of what I’ve done since I took office.”
On Thursday, Luckin posted a statement saying that it has begun a probe into the allegations against Guo.
“The Board immediately formed an independent committee, led by one of the joint provisional liquidators and joined by two independent non-executive directors, to conduct an investigation into the claims and the circumstances of the letter,” the company said.
Further, “The Board and independent committee are taking this matter seriously.”
Since July, Guo, Luckin’s former director and acting CEO of Luckin has been serving as the company’s new chairman and CEO. Luckin, which was delisted from the Nasdaq in June after confirmed fabrication of more than $300 million in sales, now trades over-the-counter.
In December, Luckin agreed to pay a $180 million fine to settle with the U.S. Securities and Exchange Commission.
After it ended a long battle with the SEC, the stock in the coffee maker has been smoking hot. Since Dec. 16, shares of Luckin have surged 126%.
However, today’s early trading price of $8.46 per share is still substantially lower than its high of $51.38 per share that was last seen in January of last year.
While the company has been looking to leave its allegations behind, it now has another internal investigation to deal with.