Chinese tech icon ordered back to China over debt woes

[BEIJING] Flamboyant Chinese tech icon Jia Yueting, who once boasted his company LeEco would take on Apple and Tesla, has been ordered back to China by financial regulators over his company's debt woes.

Mr Jia, who is thought to be in the US attempting to build his Los Angeles-based electric car company, was added to a national blacklist of debt defaulters by Chinese courts this month over hundreds of millions in unpaid loans.

State news agency Xinhua said it is the second time regulators have ordered Mr Jia to return to China after he apparently disregarded an order in September.

The Beijing branch of the China Securities Regulatory Commission "orders you to return to China before December 31, 2017," an announcement on the regulator's website said Monday.

With his name blacklisted, if Mr Jia was to return to China before the end of the year, he would be unable to take airplanes, high speed trains or stay in upscale hotels. He may also not be able to leave China.

Troubled conglomerate LeEco was founded in 2004 by Mr Jia as an online video streaming platform, but in recent years Mr Jia borrowed heavily to push the tech company into a slew of new business lines from gaming to sports to cars.

He publicly pledged to take on American tech stalwarts and held a lavish US market launch event in Silicon Valley last year to make known LeEco's ambitious expansion plans.

But at one point last year, Mr Jia had borrowed about US$1.8 billion from banks and securities firms secured by his shares in LeEco's main publicly traded arm Leshi Internet, according to investor materials seen by AFP. Leshi Internet suspended trading in its shares in April.

He also raised millions from mom and pop investors in loosley regulated private financing deals and ploughed the money into LeEco's privately held businesses.

One investor, Mo Lingmei, drained her family's bank account and pooled her money with friends to put $300,000 into a funding round for LeEco's sports venture last year.

"We don't care where Jia is," said Mo's daughter. "We are worried about the investment." As debt dragged on the company this summer, China's state media raised questions as to whether LeEco was really just a Ponzi scheme.

One of the securities firms sued Jia over unpaid loans.

The latest order from the securities regulator stems from a pledge Jia made in 2015 when selling a large block of Leshi Internet shares. He promised to loan the proceeds back to the company at no interest, the CSRC said in the announcement.

"Up until now, you still have not fulfilled this promise," the regulator said.

A spokesman for Leshi Internet declined to comment.

AFP