Luckin Coffee Inc.’s chairman, Charles Zhengyao Lu, was ousted by shareholders from the disgraced Chinese company only days after surviving an effort to remove him by some of the other Directors, according to local media reports.
A report detailing the internal investigation also stated that Charles Lu, Luckin’s co-founder, and chairman, didn’t completely cooperate with the investigation.
The months-long investigation was led by a special committee of Luckin’s board with the help of law firm Kirkland & Ellis LLP. It found evidence that Mr. Lu knew about certain related-party transactions that weren’t adequately disclosed, the person also said.
Also, a company with ties to Mr. Lu was recorded in Luckin’s systems as a supplier of raw material and received payments from Luckin approved by its former CEO, Jenny Qian, according to the report.
Last week, Luckinsaid an internal investigation into the accounting misconduct was substantially complete, and that sales were inflated from April 2019 through the fourth quarter.
The company also said it has decided to terminate a dozen employees who reported to Ms. Qian, the former CEO, and former chief operating officer Jian Liu, who knew of or took part in the scheme, and subject another 15 employees to “disciplinary actions.”
