China Sinotrans says unaffected by alleged scam at sister company

China Sinotrans says unaffected by alleged scam at sister company

SHANGHAI - Shares in China Sinotrans Ltd, one of the country's largest logistics firm, rose over 3 per cent on Thursday after it said its operations were unaffected by a report about an alleged financing scam at its sister company.

The shares were halted on Wednesday after falling 30 per cent following a report by the semi-official China Business News daily that said Sinotrans Guangxi Co was involved in a series of warehouse financing scams amounting to over 5 billion yuan (S$1 billion), and that the people in charged had been detained.

Both Sinotrans Guangxi and China Sinotrans are subsidiaries state-owned Sinotrans & CSC Holdings Co. Reuters repeatedly tried to contact executives at Sinotrans Guangxi and its parent, but they could not be reached for comment.

In a statement, China Sinotrans said its operations were not affected by the reported "irregularities" in warehousing operations and collateral management of its sister company. "The Company clarifies that the subject of the media report does not relate to the operations of the Company or any of its subsidiaries," Sinotrans said late on Wednesday.

The shares resumed trading on Thursday and were up 2.9 per cent at 0600 GMT.

China Sinotrans and Sinotrans Guangxi are in the transport and logistics business and provide collateral management services. Earlier this year, a high profile metal financing scam at Qingdao Port in China left banks and trading firms exposed to more than $1.2 billion in losses.

The Qingdao incident sent shockwaves through the global base metals market and raised concerns that some big banks may wind up or stop financing deals altogether.

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