(Yicai) Jan. 15 -- Chinese internet company Xunlei and its edge computing subsidiary OneThing Technologies have filed a civil lawsuit against former chief executive Chen Lei, who is currently living overseas, seeking CNY200 million (USD28.7 million) in damages over an alleged embezzlement dispute dating back five years.

The lawsuit, filed in a Shenzhen court, also names several former members of Chen’s core management team, including ex–Xunlei senior vice president Dong Xue and former OneThing human resources director Liu Chao, citing harm to the company’s interests. The case has been accepted by the court, Yicai learned today from a person familiar with the matter.

Chen joined Shenzhen-based Xunlei as chief technology officer in 2014 and was promoted to CEO in 2017. He was dismissed in April 2020 on suspicion of embezzlement, after which Shenzhen police opened a criminal investigation. However, Chen and other individuals involved, including Dong, left China to evade the probe and have since been living overseas, the source said.

Because Chen remained abroad for an extended period, investigators faced difficulties in collecting evidence, prompting police to withdraw the criminal case at the end of 2022. Xunlei’s decision to restart civil recovery proceedings now marks a new phase in the long-running dispute, according to the source.

Yicai attempted to contact Chen today by calling two mobile phone numbers he had previously used, but the calls could not be connected. Efforts to reach him through the instant messaging application WeChat were also unsuccessful, as his account was flagged as suspicious and could not receive messages.

According to the source, Chen’s alleged embezzlement mainly involved transferring funds through a shadow company under his control, Xingronghe Technology. An audit conducted by Xunlei’s new management in 2020 found that Chen had approved about CNY170 million in traffic procurement payments from OneThing to Xingronghe over the previous year, despite no actual business transactions taking place.

Before his dismissal, Chen also arranged for Dong and Liu to poach key employees from Xunlei to Xingronghe, the source said. This forced the company to pay substantial termination compensation and stock option buybacks and resulted in the loss of core staff.

Founded in 2003, Xunlei started as a download software provider and listed on the Nasdaq in 2014. In recent years, the company has shifted its focus toward cloud computing and blockchain services. After Chen’s dismissal, early partner Li Jinbo returned to the firm and has served as chairman and CEO since then.

Editors: Dou Shicong, Emmi Laine