AJOT Digital Edition
Issue #589

Cover of issue-589.png

New York Ports

NVOCC and Freight Forwarder Review

View Issue #589 Now!

2014 Media Kit
  • Share this article:

Qingdao Port says unit sued by Pacorini for $58.4 million amid fraud probe

By: | at 03:49 PM | Ports & Terminals  

China’s third-largest terminal Qingdao Port International, which is embroiled in an alleged financing scam, has received two lawsuits from global warehousing firm Pacorini Logistics claiming a total of $58.4 million, the firm said.

The port is already being sued by Citic Resources for $108 million.

Qingdao Port is at the centre of a fraud investigation into a private metals trading firm, Decheng Mining, which allegedly duplicated warehouse certificates stored at the port to pledge a metal cargo multiple times as collateral for bank loans.

The suspected financing scam has prompted global banks and trading houses, including Standard Chartered, HSBC and Mercuria Energy Trading SA, to fire off a series of lawsuits over their exposure that has topped $900 million.

Pacorini Logistics, the metals warehousing arm of Glencore, has filed two legal proceedings against the Dagang Branch of Qingdao Port and Qingdao Hongtu Logistics, the port said in a statement to the Hong Kong Stock Exchange late on Friday.

In the first suit, Pacorini said it suffered losses due to refusals by the port and Qingdao Hongtu Logistics to deliver 8,085.189 tonnes of aluminium ingots that were stored at the port’s bonded zone.

The goods were worth about 120.1 million yuan ($19.54 million) based on market value and Pacorini has asked for either the goods to be delivered or to be compensated accordingly.

In the second suit, Pacorini was seeking damages of $38.89 million against the port and Qingdao Hongtu for not delivering 112,731 tonnes of alumina, Qingdao Port said.

Qingdao Port said the metal shipments stored at its Dagang Branch were held by third-party cargo shipment agency, Qingdao Hongtu. The metal has been detained by authorities due to suspected criminal activities, while Qingdao Hongtu is also under fraud investigations, the port said.

“Given there is no contractual relationship between the company and Pacorini Logistics ... the company initial assessment is that the legal proceedings are without merits,” Qingdao Port said in a statement, adding that it will “vigorously contest” the allegations.

The Qingdao Maritime Court will hold hearings for both cases on Oct. 28 and Oct 29.

Faced with tough borrowing restrictions at home, many Chinese firms have turned to using commodities imports, particularly metals, as a way to secure an array of cheaper financing options. But the metal financing scam has forced global banks to suspend their trade financing business, in turn causing a sharp drop in China’s copper imports.

Lawyers have said that the string of complicated lawsuits, involving multiple claimants, cross-country jurisdictions and state-owned entities, could drag on for years and hinder a swift recovery in metal trade.

Illustrating the complexity of the legal proceedings, Qingdao Port said in a separate statement on Friday that it was also involved in another suit between ABN AMRO [ABRGPA.UL] and Citic Australia Commodity Trading Pty Ltd as a third party.

ABN has launched a suit against Citic Australia for making a wrongful claim against a metal cargo, whose pledge right is owned by the bank, Qingdao Port said in a statement.

ABN is seeking damages of one million yuan ($162,680) and is asking for Citic to withdraw all claims to the cargo. Qingdao Port said the court has ordered Qingdao Port to participate in the legal proceeding as a third party since the metal is stored at Qingdao’s Dagang port area. (Reuters)