The Singaporean subcontractor that partly supplied Hong Kong's e-channel border crossing technology is being sued for more than HK$38 million after its alleged failure to fulfil its contract resulted in additional work and costs for the government. Local company ATAL Technologies filed a writ against Stratech Systems for damages, claiming defamation. The lawsuit follows extensive media coverage of a claim filed by Stratech against ATAL in June for alleged use of technology that infringed copyright. ATAL is also seeking a court order to restrain Stratech from making further defamatory statements about it and the e-channel project, claiming an earlier allegation was false and misleading. In 2002, the Immigration Department awarded ATAL Technologies a 10-year, HK$595 million contract to install, operate and maintain automated passenger and vehicle clearance systems at immigration checkpoints. Stratech was subcontracted by ATAL in May 2004 to supply cameras, monitoring systems, software and services at the checkpoints. But in March this year, ATAL terminated the HK$17.37 million subcontract on the grounds that Stratech had failed to execute the contract with due diligence. ATAL's writ alleged that the breach forced it to pay extra costs for the system's operations, and take over maintenance for 10 years. ATAL alleged that for many months before March, when a final warning letter was issued, Stratech was late in delivering equipment and had withheld delivery pending payment to which it was not entitled. It also alleged that Stratech had ignored instructions from the plaintiff and government in March to remove a code embedded in the software that would deactivate the e-channel system if the firm was not paid by June 30. The writ states that threat caused 'considerable disruption' to immigration operations as extra staff had been sent to checkpoints in case systems failed.