UNITED States banking giant Citigroup has submitted its defence in a landmark lawsuit by local businessman Oei Hong Leong who says the bank's negligence cost him $1 billion.

The bank said Mr Oei - one of Singapore's wealthiest men - is an experienced and sophisticated investor who knew the risks of trading. It denies it was negligent in its dealings with him or that it gave inaccurate or misleading information.

Mr Oei, aged about 60, had a net open trading position of as much as US$6.9 billion (S$10 billion) in February last year, the bank said.

Mr Oei, a Citigroup client for 30 years, has alleged misrepresentation and inaccurate information from the private banking arm of Citibank. This led him to have to close his trading positions at the height of the market volatility late last year, putting him badly into the red.

Citigroup's defence, filed late on Thursday night, is the latest step in what some lawyers say could be a test case of the scope of private banks' responsibilities to clients.

One key element of the case involves the events leading up to massive foreign exchange losses that Mr Oei suffered.

In Mr Oei's dealings with the bank, he was provided with 'margin shortfall' figures. This is the sum he would need to top up, given a souring of investments.

According to Mr Oei, on Oct 22 last year, his margin shortfall was US$80 million. On Oct 27, it had jumped to US$90 million, and was more than US$200 million on Oct 28, but was back to US$28 million on Oct 29. He was later told that on Oct 27, the margin shortfall could have been as much as US$348 million.

Mr Oei claims the figures did not reflect the true market movements. He alleges the bank temporarily suffered a 'meltdown' in the accounting systems which tracked such shortfalls.

Relying totally on these shortfall figures supplied by Citibank to manage his portfolio, he grew concerned over their accuracy. However, as the losses spiralled he felt he had no choice but to close his positions, leading to losses of about US$518 million.

Read the fuill story in Saturday's edition of The Straits Times.