China billionaire Liu Qiangdong denies wrongdoing after US arrest

JD.com chief Liu Qiangdong, who has ties with Australia, won’t face US sexual misconduct charges, lawyers believe.

JD.com boss Liu Qiangdong pictured in Melbourne.

JD.com chief executive Liu Qiangdong denies any wrongdoing in connection with his arrest on suspicion of sexual misconduct in the United States, and it’s likely no charges will be filed, his attorneys said.

The billionaire, who has strong connections with Australia, was taken into custody by Minneapolis police on Friday and released the next day. Police haven’t disclosed the nature of the sexual misconduct complaint, but have called it an “active investigation.”

“He was absolutely innocent of any wrongdoing in this case,” attorney Earl Gray said in a telephone interview. “Once the police realised it was a mistake to arrest him without proper evidence, they released him without bail and without taking his passport.”

Mr Gray and attorney Joseph S. Friedberg said they met with Mr Liu, 45, in the Hennepin County Jail in Minneapolis on Saturday afternoon after being retained as legal counsel. Both men are criminal defence lawyers in the Minneapolis-St. Paul area.

“After I had been with him for a few minutes, a deputy put his head in the door and said to him, ‘You’re being released,’” Mr Friedberg said, adding that Mr Liu is now back in China.

“He was free to go back to his homeland China,” Mr Gray said. “It’s very unusual and virtually tells us that no charges will be brought against him.”

Both attorneys said they didn’t have specific knowledge of the complaint against the boss of the e-commerce giant. Mr Gray said the two lawyers would represent Mr Liu if charges were filed, but said “that’s a very remote possibility.”

Mr Liu’s company put out a statement yesterday saying “police quickly determined there was no substance to the claim against Mr. Liu,” but a Minneapolis police spokesman said there was an “active investigation” into sexual misconduct.

Mr Liu, also known as Richard Liu, is one of China’s richest people and is estimated by Forbes magazine to have a fortune of about $US7.9 billion.

He is reported to have owned a $16 million, three-storey luxury apartment in The Rocks in Sydney and another $36 million house in Sydney’s Vaucluse.

The apartment was mentioned in a rape trial in Sydney earlier this year as the scene of a dinner party in December 2015, where a 20-year old woman met another Chinese

business man, Longwei Xu, who she alleged later sexually assaulted her at the Shangri-La Hotel.

In the NSW District Court in July this year, Xu was found guilty of several offences including indecent assault, and having sex with a woman without her consent.

The woman said she was forced to drink by men at the party, became very drunk and then was assaulted by Xu in his hotel room.

Mr Liu wasn’t accused of any wrongdoing, but sought to block the release of his name, which the courts overturned. A spokesman for JD.com said at the time that Mr. Liu was “not implicated in any way” and that he had “expressed deep sympathy for the victim and profound sadness about the incident.”

“He was preparing food for the guests throughout the evening and was not present for most of the dinner. Further, the perpetrator was a casual acquaintance, and the crime was committed later that evening at a separate location,” the spokesman said.

Mr Liu married his wife, Zhang “Nancy” Zetian, who is 19 years his junior, in Sydney in October 2015.

Zhang Zetian, wife of JD.com CEO Liu Qiangdong. Pic: getty Images

Known in China as “Sister Milk Tea”, after a posting of her with a glass of milk tea went viral on Chinese social media, Ms Zhang has also been involved in supporting the launch of ASX-listed baby food company, Bubs Australia, which has a distribution contract in China with JD.com.

Bubs is backed by Brisbane businessman Albert Tse, who is married to Jessica Rudd, the daughter of former Australian prime minister Kevin Rudd.

Mr Liu was reported as having a 17 per cent stake in Bubs when it listed on the ASX in December 2016. At its launch, Bubs was also backed by the Stokes family and Ellerston Capital.

Liu Qiangdong with Malcolm Turnbull, then communications minister, in Melbourne in 2015.

Mr Liu was in Minneapolis to attend a weeklong residency at the University of Minnesota from August 26 to September 1, where he is enrolled as a student with the Carlson School of Management’s China Doctor of Business Administration, the school said in a statement.

Carlson’s professional doctoral program, also called DBA degrees, was launched last year in partnership with China’s prestigious Tsinghua University School of Economics and Management in Beijing, where JD.com is based.

It’s tailored for top-level executives working full time in China, with most courses taught at Tsinghua and a summer residency program in Minneapolis.

Mr Liu’s legal troubles have come at a time when his e-commerce company, JD.com, has been dealing with disappointing sales and ballooning research and development costs.

JD’s American depositary receipts have fallen 38 per cent since hitting a record high in January, which has pushed the value of Mr Liu’s position on paper down by about $US4.3 billion, according to a Wall Street Journal calculation based on corporate filings.

Nasdaq-listed JD dropped 13 per cent in August alone, its second worst month of the year. Analysts say the company has been hit by tougher competition by e-commerce giant Alibaba Group Holding Ltd., which has expanded its product line-up, and by weaker consumer demand as China’s economic growth cools.

“JD is going to be in a lot of trouble unless they change their business model,” said Shaun Rein, the managing director of China Market Research Group.

Adding to those worries are uncertainties as to how the criminal investigation into Mr Liu will play out.

A JD.com warehouse in China.

With Steven Russolillo

With Dow Jones Newswires