StanChart sues over metal fraud claims
Bank seeks US$35.6 million inlawsuit against Decheng Mining owner
Standard Chartered is suing Chen Jihong, the owner of a metals trading company at the centre of a loan fraud investigation on the mainland, for US$35.6 million the bank says it is owed under a loan agreement.
The bank is also claiming interest and costs under the US$40 million loan facility, according to a July 8 lawsuit filed at Hong Kong's High Court.
A spokeswoman for Standard Chartered in Singapore yesterday confirmed the lawsuit against the owner of Qingdao-based Decheng Mining and said the bank could not provide any further information. Two calls to Decheng went unanswered.
Banks are examining lending linked to metals at Qingdao port amid concern that risks are more widespread on the mainland, where traders use commodities from iron ore to rubber to get funding.
Decheng Mining pledged the same metals stockpile three times over to obtain more than 2.7 billion yuan (HK$3.37 billion) of loans, a person briefed on the matter said earlier this month, citing preliminary findings of an official investigation.
Standard Chartered's total commodity-related exposure in the Qingdao area is about US$250 million, chief executive Peter Sands said last month. The loan facility agreement formed with Chen was dated August 26, the company said in the lawsuit.
