(Yicai Global) July 3 -- In an interview with Yicai Global yesterday Wang Xiaolin, the chairman and chief executive of Californian super sports carmaker Saleen Automotive’s much-hailed China joint venture, denied allegations of embezzling and said the truth will eventually come out.

The JV’s state-backer, Nantong Jiahe Technology Investment Development, has conducted a financial audit and review and suspects Wang of providing false documents and exploiting his position to pocket huge sums of money, the administrative committee of the Jiangsu Rugao Economic and Technological Development Zone, where the JV is based, said on the same day.

The Chinese investor is suing, and last month a court in Jiangsu province seized the JV's two factories in Rugao, 144 apartments and its Shanghai office.

Nantong Jiahe holds a 34 percent stake in Jiangsu Saleen Automotive Technology into which it pumped CNY3.4 billion (USD481.3 million) in 2016. The remaining 66 percent stake is owned by four foreign firms controlled by Wang which contributed CNY6.6 billion worth of technology.

That technology was inferior and the proprietary rights had been purchased for just USD20.5 million, despite being valued by Wang at CNY6.6 billion, according to the whistleblower, the company’s former senior legal official Qiao Yudong, who laid out the allegations on his Weibo account on April 27.

Wang then supposedly started to trade the technology in for cash. Last July, he pledged 28 sets of production equipment to Nantong Jiahe in return for CNY1.2 billion (USD170 million), according to corporate data platform Qixin. Over the next four months, in 11 separate incidences, he swapped part of the shares held by the four overseas companies in the JV to the state-backer, raising a further CNY800 million (USD113.2 million).

The in-fighting coupled with the cratering of demand during the Covid-19 epidemic has brought the company to the brink of collapse. Its new Rugao factory has been shuttered since February. Meant to manufacture a wide range of high-end sedans, sports cars, sport utility and other vehicles, so far the only module JSAT has mass produced is a mini electric vehicle that came onto the market last year.

The company’s bank accounts have been frozen since Qiao’s allegations were made public and investors have shelved their plans, Wang said in an internal email on June 17. As a result, the company has been unable to pay its employees. Wang reserves the right to sue the People's Government of Rugao and Nantong Jiahe, and will gradually disclose further information, he said on June 30.

Nantong Jiahe will use its own funds to settle the social security payments, provident fund contributions and income tax dues of all the employees who left before June 30, the Nantong-based firm said that day.

Editors: Xu Wei, Kim Taylor