Aluminium firm Zhongwang seeks advice after US smuggling charges
Share price plummets as Chinese company and founder indicted in US
Beijing — China Zhongwang Holdings said on Sunday it was seeking legal advice after the company and its controlling shareholder, Liu Zhongtian, were indicted on charges they evaded $1.8bn of tariffs by smuggling aluminium into the US.
Zhongwang said in a statement to the Hong Kong stock exchange that it and Liu had still not been served with any notice in relation to the legal proceedings.
“The company takes seriously any allegations that it may have violated any law, and is seeking legal advice in relation to the alleged proceeding,” it said in the statement, adding it would keep shareholders informed of further developments.
Zhongwang is based in the northeast Liaoning province and makes aluminium products for the automotive and construction industries.
US prosecutors have alleged that companies affiliated with Liu used ports in the Los Angeles area to import aluminium from China that was disguised as a finished product not subject to duties, before making bogus sales.
Zhongwang has previously described smuggling allegations as “misleading” and “without any factual basis”.
Liu stepped down as Zhongwang chair in 2017 but remains its largest shareholder with a 74.16% stake, according to Refinitiv Eikon data.
“If the allegations were proven in court, the company could face monetary penalties,” Zhongwang said.
Zhongwang’s share price fell 14.2% on Thursday, after the indictment was reported, and fell a further 7.6% on Friday to end the week on HK$3.18 (US40c), its lowest close since October 2015.
Zhongwang said its board believed the legal proceedings had so far had no material adverse impact on the company’s operations or its financial condition.
“The company continues to operate as normal,” it said, adding that a further announcement would be published if the situation changes.