Luckin chairman resigns from CAR amid financial fraud probe

Charles Lu Zhengyao, founder of China's car rental company CAR Inc., has resigned as the chairman of the board and a non-executive director of the firm with effect from Tuesday (June 9, 2020), the Hong Kong listed company announced in a filingon Wednesday.

Lu will no longer be a member of the company's nomination committee, the filing said, noting the move was to "devote more of his time to fulfill his commitment with UCAR Inc. and other business."

The CAR went public in Hong Kong in 2014 but UCAR, a car hailing service provider which was launched in 2016, became the largest shareholder of CAR and also its biggest client, leading to investors worrying about two companies' complicated connection.

Lu, born in 1969 in a village in southeast China's Fujian Province, is known for founding car rental service company CAR and coffee chain Luckin Coffee Inc, which got listed in Nasdaq in May 2019.

Luckin, a major rival to Starbucks in China, grabbed media spotlight in April as it admitted to fabricated transactionsin 2019 with about 2.2 billion yuan (310 million U.S. dollars) worth of inflated sales. The Nasdaq notified the company on May 19 to delist.

China's market regulator and the Ministry of Finance have found evidence that Luckin paid taxes on bogus transactions and Lu may face criminal charges in China, Caixin reported on Saturday, citing an anonymous source close to the matter.