By Enda Curran
HONG KONG--A senior banker at a state-owned Chinese bank is
embroiled in two lawsuits, one where he is defending himself
against his former employer and another where he is demanding his
money back from his personal bank, which he alleges lost a part of
his wealth with risky bets.
Zhang Hongli is now a top executive at Industrial &
Commercial Bank of China Ltd., China's largest state-owned bank by
assets, and is one of the best known bankers in the country, having
previously held top China banking jobs at Deutsche Bank AG and
Goldman Sachs Group Inc. He is also one of the few executives from
a foreign bank to have served on the Chinese People's Political
Consultative Conference, a government advisory body.
He is being sued by Deutsche Bank for $6.3 million that the
German lender claims it is owed after court documents allege he
"induced" the bank to transfer him money at an unspecified date
before he left the bank in 2010 to join ICBC as executive vice
president.
Deutsche Bank's suit against Mr. Zhang is seeking damages, which
include a principal sum of nearly $4 million with the remainder in
interest, according to Hong Kong court documents dated Aug. 8.
In court papers, Deutsche Bank accused Mr. Zhang of
"misrepresentations" which "induced" the bank to transfer nearly $4
million to a bank account in the name of Harperskille Ltd. with
China Merchants Bank, Shenzhen branch. The papers don't provide
further details about the claims, nor do they say when the court
case is scheduled to be heard.
Mr. Zhang couldn't be reached for comment. His lawyer didn't
comment.
Separately, Mr. Zhang, his wife, and the trustees of his family
investment trust are plaintiffs in a suit against Singapore's DBS
Group Holdings Ltd., alleging that their investment vehicle, Wise
Lords, lost millions of dollars after it was sold complex
foreign-exchange products that turned sour during the financial
crisis. The plaintiffs claim an alleged breach of trust with DBS
and say they didn't understand the risks involved with the
investments.
The court case against DBS, which awaits a judge's verdict, was
heard in Hong Kong's High Court in October and didn't get much
attention. The original writ for the case was filed by Mr. Zhang
and his wife, Ji Zhengrong, in February 2011, according to court
documents.
In court, lawyers for DBS argued that Mr. Zhang, as a senior
executive at one of the world's largest banks, and his wife were
sophisticated investors, noting that Ms. Ji was university-educated
and steered the investment decisions for Wise Lords.
"There is zero scope in this case for a story of innocent naïfs
being bamboozled by a big bank," lawyers for DBS argued in court,
according to court documents.
Investments made by Wise Lords at different periods included
emerging market mutual funds and natural resources funds,
investments in Chinese stocks and later currency trades that built
up substantial Australian dollar, euro and U.S. dollar
decumulators, court documents show. A decumulator is a contract
that obliges investors to sell, Mr. Zhang's case, a currency at a
fixed price, on a frequent basis.
"DBS Group takes the plaintiffs' allegations very seriously. DBS
Group is satisfied the claims made by Mr. Zhang and his wife are
without merits and will not succeed. All of the claims made were
denied and vigorously defended. DBS Group is confident the claims
will be dismissed, " the bank said in emailed response to
questions.
Foreign banks have typically been known to go to great lengths
to build relations with Chinese officials in the hope of winning
lucrative contracts from large state-owned corporations, so it is
unusual to see cases like Mr. Zhang's on a public stage. When Mr.
Zhang's left Deutsche Bank in 2010, it lauded his record and
described his departure to ICBC as the first senior executive to be
hired by a Chinese bank from a foreign bank. The departure was
announced by the German bank in a release titled "Deutsche Bank
confirms Lee Zhang to follow government call."
Write to Enda Curran at enda.curran@wsj.com
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