Citic Pacific

More evidence freed up over Citic's failure to disclose HK$15.5b loss

PUBLISHED : Saturday, 17 September, 2011, 12:00am
UPDATED : Saturday, 17 September, 2011, 12:00am


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Citic Pacific has substantially cut the number of documents over which it is claiming confidentiality to block a police fraud investigation into its failure to disclose a HK$15.5 billion loss.

Lawyers for the Beijing-backed steelmaker and developer said in the Court of First Instance yesterday they were challenging police access to only 1,500 documents, compared with 45,000 previously.

The court heard earlier that Citic tried to restrict access to files relating to the HK$15.5 billion loss from an unauthorised, wrong-way bet on the future price of the Australian dollar. Citic's board knew of the loss by September 7, 2008, but did not announce it until October 20 that year.

The documents were among files and computers seized by the force's commercial crime bureau in April 2009 at Citic's Hong Kong office. The firm has tried to stop police using as evidence documents it says contain confidential advice from solicitors. Citic also argues that police seized tens of thousands of documents that fell outside the scope of the warrant.

Yesterday's hearing followed a March ruling by Mr Justice Alan Wright that Citic hand over six documents to police because there was a 'prima facie case of the existence of conspiracy to defraud'. The judge will now review the 1,500 documents to decide whether they are protected by legal professional privilege.

'We are trying to conduct a criminal investigation, and we need the documents to assist that,' said Charlotte Draycott SC, for the police. 'When we know which of the 1,500 documents are [legal privilege] documents, our foundation of investigation would become clearer.'

The judge adjourned the case to September 30.

Police also accuse the company of defrauding three banks by asking them for loans totalling HK$1.75 billion after it racked up the huge loss but before disclosing it to the market.

Citic also sought legal advice on how to delay the announcement of the loss so it could to secure the loans.