SHANGHAI/SYDNEY Aug 28 A unit of China's Shanxi
Coal International has fired off a volley of new
lawsuits over a metals financing fraud at China's Qingdao port,
adding around $137 million in claims.
Chinese authorities launched an investigation in May into
whether a private metals trading firm, Decheng Mining, and
related companies had used fake warehouse receipts at Qingdao,
the world's seventh-busiest port, to obtain multiple loans
secured against a single cargo of metal.
Officials at banks and trading houses rushed to check up on
their metal stocks at the port and more than $1 billion in
claims are now being pursued. The banks and traders have
tightened risk controls, which has curbed access to credit and
squeezed trade in metals.
Among the new suits, Shanxi Coal Import and Export has filed
a claim for $89.8 million plus interest and costs against the
Australian trading arm of China's Citic Resources Holding Ltd
for breach of contract, saying the Melbourne-based
company failed to deliver aluminium stored at the port,
according to stock exchange filings.
The filings suggest Shanxi Coal has been hit harder than
The company has also launched action against Qingdao Port
Group (IPO-QDPG.HK), the Chinese unit of Singapore logistics
company CWT Commodities and Winfair Resources Co. Ltd,
a firm that specialises in alumina, aluminium and bauxite trade.
In a separate statement, it said it had filed for legal
arbitration in disputes with units of Sinosteel for failing to
deliver metal. Shanxi is claiming a total of $41.97 million in
The company said in June it was suing Decheng and linked
companies for more than $177 million in missed payments.
CLAIMS AND COUNTERCLAIMS
The fresh round of lawsuits adds to the complex web of
claims and counterclaims to metal that traders say was pledged
multiple times to gain finance.
Among those caught up in the scandal - and in legal action
that threatens to stretch out for years - are banks such as
Standard Chartered, Standard Bank Group and
Citigroup and traders Mercuria and Glencore.
In a separate filing to the Hong Kong Stock Exchange on
Thursday, Citic said Shanxi Coal Import and Export had obtained
an asset protection order over some of its alumina and copper
stored at bonded warehouses at Qingdao port.
"(Citic Australia) is of the view that it has performed all
of its obligations under its sales contracts entered into with
Shanxi Coal Import and Export and the claim is without merit,"
Earlier this month, Citic said a court was unable to
sequester more than 100,000 tonnes of alumina it had stored at
Qingdao port, estimated to be worth $43 million.
Illustrating the complexity of the legal proceedings, bank
ABN AMRO launched a suit against Citic Australia earlier this
month for making what it called a wrongful claim against a metal
cargo that ABN AMRO claims.
ABN is seeking damages of 1 million yuan ($162,680) and is
asking for Citic to withdraw all claims to the
(1 US dollar = 6.1415 Chinese yuan)
(Reporting and writing by Melanie Burton in Sydney; Additional
reporting by Fayen Wong in Shanghai and Polly Yam in Hong Kong;
Editing by Alan Raybould)