Wilmar’s China unit found guilty of contract fraud, liable for $345 million in losses
Sign up now: Get ST's newsletters delivered to your inbox
The Wilmar unit was sued by the public prosecutor in January 2024 as an “accomplice” in contract fraud related to palm oil trades.
PHOTO: WILMAR INTERNATIONAL
Follow topic:
SINGAPORE - A subsidiary of Wilmar International has been found guilty of contract fraud by a Chinese court and ordered to jointly bear losses amounting to 1.88 billion yuan (S$345 million).
The unit was sued by the public prosecutor in January 2024 as an “accomplice” in contract fraud related to palm oil trades between state-owned enterprise Anhui Huawen and a privately owned counterparty, Yunnan Huijia Import & Export. The alleged fraud led to a 5.2 billion yuan loss for Anhui Huawen.
The judgment was handed down on Nov 19 by the Intermediate People’s Court of Huaibei City against Guangzhou Yihai, a subsidiary of Wilmar’s Shenzhen-listed arm, Yihai Kerry Arawana (YKA). YKA is 89.99 per cent owned by Wilmar.
In a bourse filing released the same day, Wilmar stated that the unit intends to contest the court’s decision, asserting that the court’s factual determinations, adoption of evidence and application of law were “erroneous”.
According to the first-instance criminal judgment, Guangzhou Yihai was found guilty of “contract fraud as an accessory” and fined one million yuan.
The court also ruled that Guangzhou Yihai must jointly bear the 1.88 billion yuan in losses incurred by the victim, state-owned enterprise Anhui Huawen, alongside Yunnan Huijia.
Additionally, a former general manager of Guangzhou Yihai, Liu Degang, was sentenced to 19 years’ imprisonment and fined 2.8 million yuan. He was found guilty of contract fraud and bribery by a non-state employee, and the court ordered his illicit gains confiscated.
The conviction of Guangzhou Yihai is based on an allegation that it had assisted Yunnan Huijia and certain people behind Yunnan Huijia in committing fraud against Anhui Huawen.
Wilmar and YKA have rejected the judgment. YKA stated that it would “fully support” its subsidiary’s appeal. The group argued that the fraud was perpetrated by Yunnan Huijia, which allegedly bribed senior executives and staff at Anhui Huawen to fabricate transactions.
Wilmar’s position is that Yunnan Huijia is attempting to implicate Guangzhou Yihai to shift responsibility for the losses.
“Guangzhou Yihai neither participated in nor had knowledge of any fraudulent activities, nor did it engage in any acts of assistance,” a statement from YKA read. The company also noted that it previously commissioned seven criminal law experts who unanimously concluded that the subsidiary’s actions did not constitute a crime.
Financial uncertainty
Wilmar noted that as the case is being appealed, the judgment has not yet taken effect, and the fine is not currently payable.
It added that because the ultimate liability remains undetermined pending the appeal, the financial impact on the company is currently uncertain. YKA stated that its operations remain normal.
Shares of Wilmar ended down 0.9 per cent at $3.29 on Nov 20, after the announcement. THE BUSINESS TIMES
