US Police Say JD.com CEO Arrested on Rape Allegations

September 5, 2018 Updated: September 5, 2018

MINNEAPOLIS/SHANGHAI–The CEO of Chinese online retail giant JD.com, Richard Liu, was arrested in Minneapolis last week following an allegation of rape, according to a police report released on Sept. 4.

The disclosure adds detail about the accusation after police said previously he had been arrested on suspicion of criminal sexual conduct.

Liu, who through his lawyers has denied any wrongdoing, was arrested late on Aug. 31 during a business trip to the United States. He was released from custody on Sept. 1 without being charged or paying bail. He soon returned to China, appearing at an event on Sept. 4 to sign an agreement with Shandong Ruyi, the owner of Swiss luxury shoe firm Bally.

The rape accusation is likely to increase pressure on Liu and the U.S.-listed JD.com, which saw its shares drop 6 percent on its first day of trade since the news of his arrest broke.

Minneapolis Police Department spokesman John Elder said on Sept. 4 that if there were any charges against Liu, they would not be filed until completion of a criminal investigation, which would not occur before this Friday, Sept. 7.

The police report said domestic violence was not involved. Elder said the alleged attack reportedly occurred at 1 a.m. local time on Aug. 31. Liu was taken into custody hours later.

Elder declined to disclose whether any accuser was cooperating with police. “I wouldn’t address that. That goes to the investigation,” he said.

According to Minnesota law, the maximum penalty if found guilty of first degree sexual assault is 30 years, and the minimum is 12 years.

Beijing-based lawyers said that if Liu was charged, there would be few legal channels to force him to return to the United States, but added that it was unlikely he would refuse, given the potential negative impact on his business interests. China does not have an extradition treaty with the United States.

They declined to be identified as they were not authorized to speak publicly on the matter.

Any prolonged absence by Liu could exacerbate risks for the company, given JD.com’s unusual rules that require Liu to be present at board meetings for the board to make decisions. It is not clear, however, if he has to be physically present or could participate by teleconference.

Liu owns over 15 percent of JD.com’s stock and controls nearly 80 percent of the company’s voting rights.

JD.com said on Sept. 5 it had no comment to make on the case.

Danny Law, Hong Kong-based analyst at brokerage Guotai Junan, said that if U.S. police charged Liu, the firm’s share price would fall further, but predicted there would not be a sharp crash because of an already steep fall so far this year.

JD.com’s shares, now valued at some $42 billion, have lost around 30 percent since the start of the year on weaker sales amid stiff competition from much bigger rival Alibaba.

The company counts Walmart, Alphabet Inc.’s Google and China’s Tencent as investors.

“If this spirals as a media focus, negative attention could offset some of the positives associated with endorsement by Walmart and Google,” analyst Rob Sanderson of MKM Partners said.

“Negative publicity could also compromise JD.com’s ability to attract international brands to its marketplace, which has been a top focus of the CEO over the past two years or so,” Sanderson said.

The agreement with Shandong Ruyi is part of that effort. Liu talked about the fashion industry in a press release about the deal but did not address his arrest in the United States.

Liu lost a court battle in Australia in July to keep his name out of a sexual assault trial. Liu was not accused of any wrongdoing in that case, according to a court document.

The case involved a person who had been a guest at a party hosted by Liu at his home in Sydney in 2015, who accused another guest of sexually assaulting her at a hotel. The defendant was found guilty of seven offenses.

By Todd Melby and Adam Jourdan.

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