Report: Qidian Founder Arrested, Ugly Rumors May Implicate Shanda, Tencent

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Caixin reported yesterday that according to sources at Shanda Literature (Shanda's online literature subsidiary), Qidian (a Shanda Literature subsidiary) founder Luo Li has been arrested, and is charged with illegally reselling copyrighted works that belonged to Shanda. Another source close to Luo confirms the arrest but dispute the charges, saying that Luo is charged with accepting bribes amounting to RMB 200,000 ($31,000) in a copyright negotiation. Luo left his position at Shanda and Qidian earlier this year, and it's not clear whether his crimes are connected to his work for Shanda's platform. And it gets uglier: when Luo resigned from Shanda Literature at the beginning of the year, the rest of the Qidian founding team resigned with him. A source close to Luo told Caixin that Luo and Qidian's other founder Yang Chen were planning to start another literature website in cooperation with Tencent Literature. If that's true, Shanda says Luo has also violated the non-competition agreement he signed when he left Shanda Literature, and Shanda's management says it has already turned that document over to authorities and will pursue legal action if Luo was planning to start a competing platform. Caixin's source close to Luo, though, says he signed no such agreement. Tencent, for its part, has refused to comment on the whole thing, saying Luo's arrest is related to an internal matter at Shanda Literature. Caixin cites industry analysts as saying that Luo's arrest is an attempt by Shanda to keep Luo and his experienced team from joining a competitor's platform. In a newer report today, the Dongfang Daily cites another anonymous source as saying that Luo's crimes may also involve higher-level employees, presumably at Shanda. In this maze of a he-said, she-said mess, it might be helpful to review what we actually know right now:

• Luo and the rest of Qidian's founding team left Shanda Literature in January.

• Luo has been arrested (The Dongfang Daily has confirmed this with Shanda).

If all the rumors are true, both Shanda and Tencent could be in some trouble, as other Shanda employees might also have been illegally selling copyrighted works, and given the rumored cooperation with Tencent after Luo's resignation, it seems very possible that Tencent was the one buying them. But as of yet, we really don't know all that much beyond that whatever else is true, Luo Li is definitely in trouble. (via Caixin and Dongfang Daily, h/t to @niubi of Sinocism for the Caixin link)
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