Metal firm sues its founding chairman
Writ against China Metal Recycling's Jacky Chun also includes his wife and 10 companies
China Metal Recycling, now under provisional liquidators, has filed a writ to the High Court to sue founding chairman Jacky Chun Chi-wai, his wife and 10 companies for damages through "false transactions" and "false trading schemes".
The writ, seen by the South China Morning Post , shows the provisional liquidators want to recover from Chun, his wife Lai Wun-yin, and the other companies - involved in recycling and trading business - losses and damages as a result of the false information and financial statements provided by Chun. It also alleges "deployment of a scheme with intent to defraud or deceive, including by means of circular round-robin payment".
China Metal, supposedly the largest scrap metal recycling company on the mainland, suffered losses from sales and purchases related to "purported payments for fictitious transactions" and mounting debt.
The 10 firms being sued are: Lane Tong (HK) Material, Jason Metal Recycle, Cheung Fat Metal Recycling, Qi Le Metal Recycling, Metallurgical Industry, Hoi Cheung Metal Recycling, Chak Kwan Metal Recycling, Pacific Metal Recycle, Healthy World Trading, and Gold Dragon International Logistics.
The writ was filed on Wednesday, two days after the provisional liquidators Cosimo Borrelli and Jocelyn Chi Lai-man, both from forensic accounting firm Borrelli Walsh, were appointed.
The Securities and Futures Commission on Friday took the unprecedented step of asking the court to wind up China Metal. Among the SFC's allegations are that it overstated key figures in its June 2009 listing prospectus.