Gionee CEO Admits to $140M Gambling Loss, But Says He Didn’t Cause Company’s Financial Woes
Posted on: November 30, 2018, 01:07h.
Last updated on: November 30, 2018, 01:07h.
The founder and CEO of Chinese smartphone company Gionee has admitted to massive gambling losses, and even says that he may have used company money to fund his casino play, but denies that his bets are the reason why his company is now on the brink of bankruptcy.
Liu Lirong, who serves as both CEO and chairman of Gionee at present, made his comments in response to reports that he lost 10 billion yuan ($1.44 billion) at the Imperial Pacific Resort on the island of Saipan.
Liu Denies Reported Amount of Gambling Losses
Liu didn’t deny the report entirely, but disputed the amount, saying a loss of 10 billion yuan would be an absurd amount.
“I did participate in gambling in Saipan, but how could I possibly lose that much?” Liu said in an interview with a reporter from Security Times. “If it is true, shares of Imperial Pacific should have surged.”
Instead, Liu told the reporter that he merely lost a little over 1 billion yuan ($143 million). That’s still a significant amount, however, and Liu also admitted that it was possible that he may have mingled his private assets with those of the company, as he has borrowed from Gionee is the past for personal reasons.
“In the 16 years since I established Gionee, I have always been the absolute authority in the company,” Liu said. “My only income comes from Gionee, and it’s inevitable that sometimes boundaries between corporate assets and personal money could be blurred.”
Gionee Struggles With Mounting Debt, Supplier Relations
The questions over Liu’s gambling habits come as Gionee is dealing with severe financial troubles that have put the company on the edge of bankruptcy. While the firm holds six percent of China’s smartphone market, ranking sixth in the country, it currently holds about 17 billion yuan ($2.44 billion) in debt, and some suppliers have stopped working with Gionee after months of missed payments.
But even if those debts aren’t directly related to trips to the casino, this isn’t the first time that Liu’s gambling has been raised as an issue. In January, a district court in China froze Liu’s 41 percent stake in the company, with speculation that the move was related to growing concern about his gambling debts.
In late October, Liu was also added to China’s social credit black list, with a court in Shenzhen saying that he would have to pay more than 200 million yuan ($28.7 million) in debt before he could be removed from the list.
Liu says that the company has simply been losing money due to increased competition and poor relationships with suppliers, not because of his personal debts. According to the CEO, Gionee averaged a loss of more than 100 million yuan ($14.4 million) per month from 2013 through 2015, an amount that increased to about 200 million yuan ($28.7 million) in 2016 and 2017.
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