SHANGHAI/SYDNEY, Aug 28 (Reuters) - 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 thought.
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 damages there.
The company said in June it was suing Decheng and linked companies for more than $177 million in missed payments.
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,” Citic said.
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 cargo. (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)