01 Aug 2019
Chinese aluminium billionaire Liu Zhongtian has been indicted in the US on allegations that he evaded US$1.8 billion in American tariffs, using a complex scheme that supposedly smuggled vast quantities of the metal into the US using a series of firms that he secretly controlled.
Liu, China Zhongwang Holdings and others were indicted on dozens of charges of conspiracy, wire fraud and international money laundering.
They are also accused of defrauding investors in the 2009 Hong Kong listing of China Zhongwang, Liu’s flagship firm. The prospectus for the US$1.26 billion IPO – one the biggest in the world that year – deceptively boosted the company’s revenue by faking information about its US market via the smuggling scheme, the indictment claims.
“This indictment outlines the unscrupulous and anti-competitive practices of a corrupt businessman who defrauded the United States out of US$1.8 billion in tariffs due on Chinese imports,” said United States Attorney Nick Hanna for the Central District of California in a press release.
“Moreover, the bogus sales of hundreds of millions of dollars of aluminum artificially inflated the value of a publicly traded company, putting at risk investors around the world. The rampant criminality described in this case also posed a threat to American industry, livelihoods and investments.”
The indictment was filed by a California grand jury this May 7, but was only unsealed this week. It comes amid high-stakes trade negotiations between Washington and Beijing, which have been embroiled in a trade war for more than a year as US President Donald Trump seeks to draw down China’s trade surplus with the US.
In addition to evading tariffs, Liu and his co-accused are said to have used the smuggling scheme to “maintain the false pretence that defendant China Zhongwang was obtaining significant revenue from the sales of aluminium to United States-based customers even though there were few, if any, such sales”, according to the indictment.
The aluminium was actually being stockpiled at US and Mexican facilities ultimately controlled by Liu, it said, in what amounted to fraud against investors in China Zhongwang.
By Ian Young, South China Morning Post, 1 August 2019
Read more at South China Morning Post
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