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19-06-2014, 02:00 AM
An honorable member of the Coffee Shop Has Just Posted the Following:
Temasek’s investee CITIC Resources hit by metal scam (http://www.tremeritus.com/2014/06/18/temaseks-investee-citic-resources-hit-by-metal-scam/)
http://www.tremeritus.org/simages/dmca_protected_sml_120n.png http://www.tremeritus.org/wp-content/themes/WP_010/images/PostDateIcon.png June 18th, 2014 | http://www.tremeritus.org/wp-content/themes/WP_010/images/PostAuthorIcon.png Author: Editorial (http://www.tremeritus.com/author/editorial/)
http://www.tremeritus.org/wp-content/uploads/2014/02/Temasek-Holdings-Logo-300x170.jpg
International news wire Reuters reported [Link (http://www.reuters.com/article/2014/06/18/china-qingdao-citic-resources-idUSL4N0OZ04R20140618)] today (18 Jun) that Temasek’s investee company, CITIC Resources Holding Ltd, is missing more than 100,000 tonnes of Alumina ore stored at the Qingdao port of China.
CITIC Resources Holdings, listed on the Hong Kong exchange, is a a subsidiary of CITIC Group in China. It is a commodity trader of natural resources. Temasek Holdings owns 11.46% share in CITIC Resources and is the 2nd largest shareholder in the company after CITIC Group.
CITIC Resources said that it did not have information on the current status of an investigation by Qingdao authorities and was not yet able to accurately assess the impact of the alleged fraud on the company.
CITIC Resources is the latest firm caught up in a scandal that has raised broader worries about the risks of metal financing in China.
The missing ore is currently linked to a separate probe into Decheng Mining, a trading unit of Dezheng Resources Holding Co Ltd. The authorities are probing into the alleged duplication of warehouse receipts to obtain multiple loans secured against a single cargo of metal. When a cargo arrives at a bonded warehouse in China, the warehouse company typically issues a receipt as proof of the stocks. The firm can then use the receipt to obtain short-term financing from a bank, using the metal cargo as collateral.
This has become a popular method of raising finance in China, often to skirt higher local borrowing rates and other credit restrictions, and is not illegal. The short-term funds raised might be invested in other markets, such as property, or re-lent via the regular or shadow banking system. However, by duplicating receipts to repeatedly mortgage the full value of the cargo is fraudulent. It results in multiple creditors holding claims to the same collateral.
“Authorities will be able to trace which company claimed the metal but if those stocks have already been liquidated then there’s not much CITIC can do, especially if the other firm also had proper documentation,” said a Shanghai-based metals trader.
New citizen Chen Jihong
The chairman of Dezheng Resources Holding is a Singaporean Chen Jihong. He is a new citizen. He was born in Shantou in the southern province of Guangdong. Chen has been trading metals since the 1990s, and is a well-known figure in Qingdao, a major metal hub on the eastern seaboard, according to industry sources.
Bankers who have previously dealt with Chen said he has been detained by authorities since late April. Singapore’s Ministry of Foreign Affairs (MFA) declined to comment on whether Chen had been detained but said it was monitoring the situation. Reuters managed to contact Chen’s wife by phone from his home number in Singapore but she said she had not heard from her husband in many weeks and did not know where he was.
Reuters reported [Link (http://www.reuters.com/article/2014/06/13/china-qingdao-idUSL4N0OS1XO20140613)] that the trail which led investigators to Chen began with a Communist Party corruption probe in the old Silk Road city of Xining. In late April, the authorities were investigating Xining’s Party Secretary, Mao Xiaobing, for graft. At the time, the authorities were also investigating Mao’s business associates and one of them is Chen. Chen’s business ties to Mao were through Western Mining Co Ltd, a Shanghai-listed subsidiary of state-controlled Western Mining Group.
Sources said that by May, some Chinese banks had learned of Chen’s detention and started cutting credit to the firm and asking for outstanding payments. By late May, Chinese and foreign banks and traders scrambling to check their Decheng-linked metal stocks found that commodities appeared to have been used for multiple financing.
According to Chinese business daily Caixin, Dezheng Resources and its subsidiaries had borrowed a total of 14.8 billion yuan (US$2.38 billion) from banks. An ICBC official said Decheng has defaulted on loan repayments since April and owes the bank more than 100 million yuan ($16 million) for its onshore business unrelated to metals financing at Qingdao.
CITIC Resources now joins a number of foreign financial institutions like Standard Bank Group and a part-owned unit of Louis Dreyfus, Singapore-listed GKE, which warned last week of potential losses. Standard Chartered has said it is reviewing metals financing to a small number of companies in China while Citi Group said it would work closely with authorities, warehousing companies and clients to resolve any issues. South Africa-based Standard Bank said it was investigating potential irregularities at Qingdao, but could not quantify losses, if any.
AFP has also reported [Link (https://uk.finance.yahoo.com/news/china-group-used-same-metal-125300054.html)] that one of Dezheng’s subsidiaries took out 17 loans from six foreign lenders over the last decade, quoting a report from the 21st Century Business Herald (21st CBH). The report did not give totals but named them as Standard Chartered, HSBC, BNP Paribas, Singapore’s DBS, Dutch-Belgian bank Fortis and KBC of Belgium.
“We believe the developments in Qingdao are likely to continue the significant scaling back of [foreign exchange] inflows from foreign banks into China via commodity financing business,” Goldman Sachs said. Goldman Sachs estimated that commodity finance deals in China were worth as much as US$160 billion, or about 31 percent of China’s total short-term foreign exchange loans.
The scandal has hit prices of global metals, reflecting market fears about business practices in China and worries that the probe could extend to other ports and prompt a crackdown on using metal as collateral for finance.
Western investors are now particularly fearful that lifting the lid on even a seemingly isolated case of fraud in Chen’s case may uncover more landmines lurking within China’s opaque “shadow” financial system, and sent global banks and trading houses scrambling to check their exposure.
If the charges on Chen are proven, Chen is truly a “talent” for single-handedly sending fears to all the global banks and investors involving in commodity financing trades in China.
Click here to view the whole thread at www.sammyboy.com (http://www.sammyboy.com/showthread.php?184325-Temasick’s-investee-CITIC-Resources-hit-by-metal-scam-New-PRC-Shityzen-The-Mastermin&goto=newpost).
Temasek’s investee CITIC Resources hit by metal scam (http://www.tremeritus.com/2014/06/18/temaseks-investee-citic-resources-hit-by-metal-scam/)
http://www.tremeritus.org/simages/dmca_protected_sml_120n.png http://www.tremeritus.org/wp-content/themes/WP_010/images/PostDateIcon.png June 18th, 2014 | http://www.tremeritus.org/wp-content/themes/WP_010/images/PostAuthorIcon.png Author: Editorial (http://www.tremeritus.com/author/editorial/)
http://www.tremeritus.org/wp-content/uploads/2014/02/Temasek-Holdings-Logo-300x170.jpg
International news wire Reuters reported [Link (http://www.reuters.com/article/2014/06/18/china-qingdao-citic-resources-idUSL4N0OZ04R20140618)] today (18 Jun) that Temasek’s investee company, CITIC Resources Holding Ltd, is missing more than 100,000 tonnes of Alumina ore stored at the Qingdao port of China.
CITIC Resources Holdings, listed on the Hong Kong exchange, is a a subsidiary of CITIC Group in China. It is a commodity trader of natural resources. Temasek Holdings owns 11.46% share in CITIC Resources and is the 2nd largest shareholder in the company after CITIC Group.
CITIC Resources said that it did not have information on the current status of an investigation by Qingdao authorities and was not yet able to accurately assess the impact of the alleged fraud on the company.
CITIC Resources is the latest firm caught up in a scandal that has raised broader worries about the risks of metal financing in China.
The missing ore is currently linked to a separate probe into Decheng Mining, a trading unit of Dezheng Resources Holding Co Ltd. The authorities are probing into the alleged duplication of warehouse receipts to obtain multiple loans secured against a single cargo of metal. When a cargo arrives at a bonded warehouse in China, the warehouse company typically issues a receipt as proof of the stocks. The firm can then use the receipt to obtain short-term financing from a bank, using the metal cargo as collateral.
This has become a popular method of raising finance in China, often to skirt higher local borrowing rates and other credit restrictions, and is not illegal. The short-term funds raised might be invested in other markets, such as property, or re-lent via the regular or shadow banking system. However, by duplicating receipts to repeatedly mortgage the full value of the cargo is fraudulent. It results in multiple creditors holding claims to the same collateral.
“Authorities will be able to trace which company claimed the metal but if those stocks have already been liquidated then there’s not much CITIC can do, especially if the other firm also had proper documentation,” said a Shanghai-based metals trader.
New citizen Chen Jihong
The chairman of Dezheng Resources Holding is a Singaporean Chen Jihong. He is a new citizen. He was born in Shantou in the southern province of Guangdong. Chen has been trading metals since the 1990s, and is a well-known figure in Qingdao, a major metal hub on the eastern seaboard, according to industry sources.
Bankers who have previously dealt with Chen said he has been detained by authorities since late April. Singapore’s Ministry of Foreign Affairs (MFA) declined to comment on whether Chen had been detained but said it was monitoring the situation. Reuters managed to contact Chen’s wife by phone from his home number in Singapore but she said she had not heard from her husband in many weeks and did not know where he was.
Reuters reported [Link (http://www.reuters.com/article/2014/06/13/china-qingdao-idUSL4N0OS1XO20140613)] that the trail which led investigators to Chen began with a Communist Party corruption probe in the old Silk Road city of Xining. In late April, the authorities were investigating Xining’s Party Secretary, Mao Xiaobing, for graft. At the time, the authorities were also investigating Mao’s business associates and one of them is Chen. Chen’s business ties to Mao were through Western Mining Co Ltd, a Shanghai-listed subsidiary of state-controlled Western Mining Group.
Sources said that by May, some Chinese banks had learned of Chen’s detention and started cutting credit to the firm and asking for outstanding payments. By late May, Chinese and foreign banks and traders scrambling to check their Decheng-linked metal stocks found that commodities appeared to have been used for multiple financing.
According to Chinese business daily Caixin, Dezheng Resources and its subsidiaries had borrowed a total of 14.8 billion yuan (US$2.38 billion) from banks. An ICBC official said Decheng has defaulted on loan repayments since April and owes the bank more than 100 million yuan ($16 million) for its onshore business unrelated to metals financing at Qingdao.
CITIC Resources now joins a number of foreign financial institutions like Standard Bank Group and a part-owned unit of Louis Dreyfus, Singapore-listed GKE, which warned last week of potential losses. Standard Chartered has said it is reviewing metals financing to a small number of companies in China while Citi Group said it would work closely with authorities, warehousing companies and clients to resolve any issues. South Africa-based Standard Bank said it was investigating potential irregularities at Qingdao, but could not quantify losses, if any.
AFP has also reported [Link (https://uk.finance.yahoo.com/news/china-group-used-same-metal-125300054.html)] that one of Dezheng’s subsidiaries took out 17 loans from six foreign lenders over the last decade, quoting a report from the 21st Century Business Herald (21st CBH). The report did not give totals but named them as Standard Chartered, HSBC, BNP Paribas, Singapore’s DBS, Dutch-Belgian bank Fortis and KBC of Belgium.
“We believe the developments in Qingdao are likely to continue the significant scaling back of [foreign exchange] inflows from foreign banks into China via commodity financing business,” Goldman Sachs said. Goldman Sachs estimated that commodity finance deals in China were worth as much as US$160 billion, or about 31 percent of China’s total short-term foreign exchange loans.
The scandal has hit prices of global metals, reflecting market fears about business practices in China and worries that the probe could extend to other ports and prompt a crackdown on using metal as collateral for finance.
Western investors are now particularly fearful that lifting the lid on even a seemingly isolated case of fraud in Chen’s case may uncover more landmines lurking within China’s opaque “shadow” financial system, and sent global banks and trading houses scrambling to check their exposure.
If the charges on Chen are proven, Chen is truly a “talent” for single-handedly sending fears to all the global banks and investors involving in commodity financing trades in China.
Click here to view the whole thread at www.sammyboy.com (http://www.sammyboy.com/showthread.php?184325-Temasick’s-investee-CITIC-Resources-hit-by-metal-scam-New-PRC-Shityzen-The-Mastermin&goto=newpost).