Scandal-scarred Chinese coffee shop Luckin Coffee (OTC:LKNC.Y) announced today the independent director it appointed at the end of March and assigned to the company's audit committee has resigned, effective immediately.
The coffee shop, which had seemingly been on a massive growth trajectory, has since been accused of inflating its sales numbers in a major accounting scandal, reportedly faking as much as two-thirds of all sales it made.
A bitter brew
Tianruo Pu, an accounting executive who previously served as CFO of two international companies, online recruitment platform Zhaopin and telecom infrastructure provider UTStarcom, was appointed to Luckin's board as an independent director at the end of March as accusations of accounting fraud swirled around the company.
Pu was subsequently appointed to the audit committee of the coffee chain as well as a special committee to oversee an internal investigation of the allegations against the company. Logistics executive Wai Yuen Chong was appointed to the board and the audit and special committees at the same time.
The internal investigation found its COO and other employees fabricated some $311 million in sales, which has resulted in the SEC and China's State Administration for Market Regulation launching their own investigations into the company.
The statement from Luckin Coffee said Pu's resignation was for "personal reasons" and the company will seek a replacement. Wai Yuen Chong is continuing in his role on the audit and special committees along with Luckin chairman Sean Shao.