Factbox: Potential losses in suspected China port metals financing fraud near $900 mln

GKE

03/08/2014 22:06

(Updates with details of new court proceedings) 
    Aug 4 (Reuters) - HSBC  HSBA.L  last week became the latest 
company to initiate legal action in connection with the 
suspected metals financing fraud at China's Qingdao port, 
signalling losses could climb from the events at the world's 
seventh busiest port.  ID:L4N0Q53FZ  
    Chinese authorities in May launched an investigation into 
whether a private metals trading firm, Decheng Mining, and its 
related companies used fake warehouse receipts at Qingdao Port 
to obtain multiple loans secured against a single cargo of 
metal.  ID:nL4N0OS1XO  
    The exposure of foreign banks and various trading firms, 
including CITIC Resources Holdings Ltd  1205.HK  and Mercuria 
Energy Trading SA, could amount to more than $880 million, 
according to an aggregation of amounts in company statements, 
reports and court documents. 
    Local media also said Decheng and its parent owed Chinese 
banks at least 16 billion yuan ($2.58 billion). Decheng has not 
commented on the probe.  ID:nL4N0PL2VU  
     
    - HSBC has commenced wind-up proceedings against Zhong Jun 
Resources (S) Pte, the overseas arm of Decheng, after the firm 
defaulted on payments. Zhong Jun Resources owes the lender $4.3 
million, according to court documents. 
    - Dutch state-owned bank ABN Amro  ABRGPA.UL  won an order 
in the Singapore Court last week for Chen Jihong, chairman of 
Decheng's parent company, to pay it $22 million owed under a 
loan agreement with Zhong Jun and another of his companies. 
    - Citigroup  C.N  said last month it has about $280 million 
in loans tied to commodities in two ports at the centre of the 
scandal. That is a big portion of its roughly $400 million worth 
of commodity financing deals in China.  ID:nL2N0PT24L  
    - CITIC Australia, a unit of Hong Kong-listed Citic 
Resources  1205.HK , has begun court proceedings against 
subsidiaries of Qingdao Port  6198.HK  and is claiming losses of 
$108.1 million, according to exchange statements. 
    - Britain's Standard Chartered  STAN.L  said it had started 
legal action to claim about $36 million as part of a $40 million 
loan facility for Zhong Jun Resources, the Singapore arm of 
Decheng, a spokeswoman told Reuters.  ID:nL4N0PP2KE  
    - Standard Bank Group  SBKJ.J  said last month it has a 
total exposure related to the Qingdao port of about $170 million 
worth of aluminium and has started legal proceedings in Shandong 
province. It also has an exposure of $40 million worth of 
aluminium at other bonded warehouse facilities in Shandong 
province and has started legal proceedings to secure its 
position.  ID:nL4N0PL2VU  
    - Mercuria had alumina worth about $44 million stuck at 
Qingdao port, according to four banking sources with direct 
knowledge of the situation.  ID:nL4N0PK1F0  
    - Shanxi Coal International Energy Group  600546.SS  said it 
was suing Decheng and its parent for more than $177 million in 
missed payments the two had guaranteed.  ID:nL4N0P81DX  
    - Singapore-listed warehouse company GKE Corporation Ltd 
 GKEC.SI , a unit of trading house Louis Dreyfus, said in June 
that an investigation into the port fraud may affect the 
business of GKE (Shanghai) metal logistics. It has not stated 
the value of any potential exposure. 
 
 (Reporting by Fayen Wong in Shanghai and Melanie Burton in 
SYDNEY; Editing by Alex Richardson) 
 ((melanie.burton@thomsonreuters.com)(+612 9373 1803)(Reuters 
Messaging: melanie.burton.thomsonreuters.com@reuters.net)) 
 
Keywords: CHINA QINGDAO/LOSSES