But Citic Pacific's appeal means the police cannot use the evidence until this latest battle has wound its way through the civil courts.

Citic Pacific failed to reveal massive derivatives losses, caused by an unauthorised bet on the Australian dollar, until six weeks after it occurred. The disastrous wrong-way bet led to the company being rescued by its parent Citic Group and the resignation of chairman Larry Yung Chi-kin.

On March 18, the High Court ruled the police could access six key files that Citic Pacific has for the past two years argued should be shielded from investigators because they contain advice from its lawyers and are therefore covered by legal privilege. The Department of Justice told the court the files showed evidence of fraud.

Citic Pacific borrowed HK$1.75 billion from lenders, including Bank of China, in between finding out about the derivatives loss and disclosing it, the department said.

'Whilst they kept that information secret from the shareholders, from the public, and from the exchange, they went to the banks,' prosecutor Charlotte Draycott said on March 10.

Citic Pacific said yesterday it was appealing because 'the special committee of the board ... wishes to say at this time that in its work it has found no evidence of fraud'.

That special committee comprises Citic Pacific chief executive Zhang Jijing and Citic Group's chief financial officer Ju Weimin.

The Commercial Crime Bureau raided Citic Pacific's Hong Kong office in April 2009, seizing files and computers.

The six disputed files were documents Citic Pacific handed to the Securities and Futures Commission, which is also investigating the derivatives incident. The stock market regulator passed the documents to the justice department, which wants to give them to the police for use in the criminal investigation.

For its part, the department has been critical of Citic Pacific's lengthy avoidance of the police investigation.

After Judge Wright released his judgment against Citic Pacific last month, prosecutor Richard Turnbull accused the company's board of wasting shareholders' funds in its attempt to prevent a full inquiry.

'A company is its shareholders, the shareholders are the company,' Turnbull argued. 'Yet the company is, in this lengthy litigation, using shareholders' funds to defend a prima facie case of fraud.'

In court, the justice department claimed that because Citic Pacific waived its right to confidentiality by handing files to the SFC, it should no longer apply.

Citic Pacific, however, maintained that the waiver of privilege only applied to the SFC.

Key files

Citic Pacific says evidence covered by confidentiality

The amount in HK dollars Citic Pacific borrowed between the time of the losses and their eventual disclosure: $1.75b