Li Qi, the former chief operating officer of Alibaba, has lost nearly $100 million after an investment in a private jet operator crashed spectacularly.
Li was a 30% shareholder and board director of Singapore-based Zetta Jet, a company that operated private jets for the super-rich during its brief three-year existence. Zetta collapsed in 2017 amid allegations of embezzlement, fraud and corruption by its co-founder Geoffrey Cassidy.
According to the Huffington Post, Li Qi became a shareholder in Zetta in 2016 when he invested $19 million to acquire a 10% stake in the business. He invested approximately $40 million to take his stake to 30% in June 2017, just weeks before the company collapsed. Li also loaned Zetta a further $70 million via various offshore companies.
These investments and loans were made through Truly Great Global Ltd., Universal Leader Investments and Glove Assets Investment – all registered in the British Virgin Islands (BVI).
According to bankruptcy documents, Li is listed as a creditor owed $90 million by Zetta but his total loses could be as high as $130 million if the equity investments are included.
Li’s involvement in Zetta is likely to come under scrutiny given the allegations that have been made against Geoffrey Cassidy.
In a bankruptcy motion filed in the United States, James Seagrim and Stephen Walter (co-founders of Zetta), claim that Cassidy looted up to $30 million from the business. They accuse him of fraud, embezzlement and corruption.
They allege that Cassidy spent between $3 million and $10 million of company money on private yachts and $2 million on luxury cars. They also claim he received $2 million in kickbacks from brokers every time Zetta bought a new private jet. Cassidy has denied wrongdoing but has admitted to lavish spending in the months before Zetta collapsed.
These allegations could be damaging to Li Qi’s reputation given that he sat on Zetta’s board of directors while these activities are said to have taken place.
According to the Huffington Post, Li may also face scrutiny over the millions of dollars in interest and other payments made by Zetta into his US bank accounts in the months before the company collapsed. This allowed Li to quietly move some of his wealth out of China.
After the embezzlement allegations were made against Cassidy, Li Qi sought to keep Zetta Jet in the air with an offer of further investment from Chinese friends. In return for the bailout, Li would become chairman of Zetta. However, the deal failed to materialise and Zetta collapsed.
Li’s wealth comes from his early involvement in Alibaba, the online retailing giant. He joined the company in 2000 and was the head of its international division between 2003 and 2004. He became the chief operating office in 2005 but left Alibaba in 2008 so he could study in Canada.
Li had previously worked with Jack Ma, Alibaba’s founder, at China Yellow Pages in the mid-1990s and the two men are said to be good friends.
Since his departure from Alibaba, Li has maintained indirect links to Alibaba via several entities including Shanghai Bichui Internet Technology. Li is the executive director of this company, which was founded by Alibaba in 2013.