Citic Resources sues Qingdao Port for US$108m compensation
Mainland firm demands return of metals held by authorities as part of fraud probe into port
Citic Resources has filed a lawsuit against Qingdao Port International, demanding US$108 million in compensation if its fails to deliver base metals retained by the authorities as part of the fraud investigation which struck one of the biggest ports on the mainland.
The port operator said in a Hong Kong stock exchange announcement that, together with its parent company, it has received a writ of summons, a notice of response to action and a complaint from Qingdao Maritime Court.
Meanwhile, HSBC and ABN Amro Bank sued Chen Jihong, the Singapore national detained on the mainland and said to be at the centre of a probe over whether metals were pledged multiple times as collateral for loans.
HSBC asked Singapore's High Court this month to liquidate Chen's Zhong Jun Resources after it failed to repay US$4.3 million. ABN Amro won an order for Chen to pay it US$22 million owed under a loan agreement with Zhong Jun and another of his companies.
Chen is the focus of a Chinese probe into alleged fraud at Qingdao port, two bankers assisting with the investigation said last month.
Qingdao Port quoted a litigation document as saying that Citic Resources claims it suffered a severe loss from its inability to dispose of 223,270 tonnes of sandy metallurgical grade aluminium and 5,004 tonnes of electrolytic copper as a result of Qingdao Port's refusal to deliver the metals.
Citic Resources declined to comment on the announcement.
Yu Shengping, a vice-minister in Qingdao Port International's legal department, told the that all parties would have to wait for the result of the criminal investigation before there could be any meaningful progress in the civil action, implying that the legal action taken by Citic Resources would likely be a prolonged process.
"This incident has brought damage to the reputation of Qingdao Port. We are also victims," said Yu.
The court will hold its first hearing on September 9.
Commodity financing has come to the fore because millions of dollars were lent by banks to groups or firms using metals or agricultural goods as collateral. Lenders are deeply worried that in some cases, the same commodity was used for loans multiple times. Earlier this month, Standard Chartered filed a lawsuit to gain control of metal stocks in mainland warehouses.
Citic Resources had declined to name the defendant when it announced earlier this month that it was taking court action against the operator of a bonded warehouse at the port.
The plaintiff in the lawsuit is Citic Australia Commodity Trading, a trading firm owned by Citic Resources.
Additional reporting by Bloomberg
