Stark Investments, the multibillion-dollar US hedge fund, has scored a partial victory in its long-running cat-and-mouse fight to seize assets from Sun Jiangrong, a Fujian tycoon it is pursuing over a S$120 million (HK$660 million) unpaid loan. Stark, which lent Sun's private company Thumb Holdings the cash in 2007, has been battling the businessman in Hong Kong and mainland courts for almost a year in an attempt to win shares in his 10 billion yuan (HK$11.35 billion) property developer, Chongqing Dading, as compensation for the unpaid debt. Yet Sun has now twice succeeded in transferring ownership of the real estate company to an outside entity allegedly controlled by his brother-in-law, using slightly different tactics each time. The Chongqing court has published an asset freezing order effectively barring Sun from moving ownership of Chongqing Dading anywhere and earmarking the shares for Stark's ownership, should the hedge fund win its court case. In a separate case, Sun has run into trouble over Sino-Environment Technologies, a Fujian-based waste management company he founded which is listed on the Singapore stock exchange. Sino-Environment has defaulted on its US$109 million of corporate bonds. Its auditors, PricewaterhouseCoopers, said in November last year it could not verify the whereabouts of US$85 million of the company's cash. Sun resigned as chairman of Sino-Environment in January, along with the firm's entire executive board. Stark's battle with Sun began in February last year, when the hedge fund's loan to Thumb, came due but was not repaid. In May last year, the Hong Kong High Court appointed accountants Ferrier Hodgson as receivers of one of Sun's companies which owned Chongqing Dading, named Top One A. But the receivers then discovered Top One A no longer owned the property firm. Ferriers director John Batchelor told the Hong Kong High Court last August that Chongqing Dading's shares had been moved into an entity named Fujian Dahong, which he claimed was controlled by Sun's brother-in-law, Sun Jing Sheng. Sun Jiangrong declined to comment while his brother-in-law could not be reached. In June last year, the Chongqing court froze the Chongqing Dading shares, which should have made it impossible for Sun to move them beyond Fujian Dahong. But Sun tried another tactic. In May, he also moved shares in Chongqing Dading's three subsidiaries that own its land to Fujian Dahong, companies registry filings obtained by the South China Morning Post reveal. Stark discovered this second transfer of Chongqing Dading last month, an adviser to the hedge fund confirmed. This week, the Chongqing court froze the shares in the three Chongqing Dading subsidiaries, preventing them from being moved even further out of Stark's reach. The hedge fund is also involved in the Sino-Environment debacle. In May, Stark seized Sun's 56 per cent stake in the Singapore-listed waste management company as partial compensation for the unpaid debt. Because Sun lost control of the company, Sino-Environment defaulted on contract terms with its bondholders, who are owed US$109 million. Shares in Sino-Environment had slumped 85 per cent since January 2009 until September, when the Singapore stock exchange suspended the stock from trading. The Monetary Authority of Singapore is investigating the company. The Fuzhou police said in January they found no evidence of embezzlement at Sino-Environment. Jones Lang La Salle valued Chongqing Dading at 10 billion yuan in 2008, according to court papers reviewed by the Post.
