StanChar sues businessman connected to Qingdao Port fraud case

Standard Chartered PLC is suing Chen Jihong, the -Chinese businessman at the center of a suspected fraud at Qingdao Port in East China's Shandong Province, joining a list of firms that have taken legal action.

Standard Chartered is the fourth company to say it has started legal action to recoup losses since Chinese authorities launched an investigation into whether a metals trading firm, Decheng Mining, and its related companies used fake warehouse receipts at Qingdao Port to obtain multiple loans secured against a single cargo of metal.

Valerie Tay, a spokeswo-man for the bank, confirmed that the bank has started legal proceedings against Chen.

The bank is suing for $35.6 million plus costs and interest, according to the court documents reviewed by Reuters on Monday. The amount is significantly smaller than its announcement last month that its total commodity-related exposure around Qingdao Port was about $250 million.

Other firms that have launched legal proceedings include Standard Bank PLC and China's Shanxi Coal International Energy Group.

Standard Bank said its total exposure to metals at Qingdao Port was about $170 million and it also has an exposure of $40 million worth of aluminum at other bonded warehouse facilities in Shandong Province.

A native of South China's Guangdong Province who has since taken Singaporean citizenship, Chen is chairman of Qingdao-based Dezheng Resources Holding Co, which is the parent company of Decheng Mining.

Western banks such as Standard Chartered and HSBC, which face restrictions in the domestic loan market, are active in the metals financing business where they give companies ready access to short-term credit in exchange for goods.