Did ‘billion-dollar’ gambling loss in Saipan imperil Chinese smartphone maker Gionee?

The founder of Shenzhen-based Gionee, a Chinese smartphone brand on the verge of bankruptcy, has admitted he may have used company assets to gamble at a Hong Kong-listed casino in Saipan, but denied a reported loss of 10 billion yuan, saying it was only a fraction of this amount.

“I did participate in gambling in Saipan, but how could I possibly lose that much (10 billion yuan)? If it is true, shares of Imperial Pacific [the casino owner] should have surged,” Liu Lirong, Gionee’s chairman and chief executive, said in an interview with Securities Times in Hong Kong at the weekend, responding to recent reports that his gambling loss of 10 billion yuan (US$1.44 billion) had resulted in the collapse of Gionee.

When asked how much he lost gambling, Liu told the Securities Times reporter, “a bit more than 1 billion yuan”.

Gionee, which ranked behind Apple in sixth place for handset sales in China last year, is now on the verge of bankruptcy restructuring as suppliers have halted component sales after failing to receive payments for several months, according to the report. Liu admitted in the interview that Gionee’s total debts amount to 17 billion yuan, with 10 billion yuan of this owed to banks, 5 billion yuan to upstream suppliers and about 2 billion to advertising agencies.

As the “absolute authority” at Gionee – a company he founded – for 16 years, Liu said in the interview that he may have confused his private assets with those belonging to the company as he has borrowed frequently over the years for personal reasons.

The media relations team at Gionee has been disbanded although a spokesman still working for the company did not reply to a WeChat request for comment on Liu’s interview with Securities Times. Neither did Hong Kong-listed Imperial Pacific International Holdings Ltd respond to an email request for comment on Liu’s interview.