Now, what was that "similar action by an independent party"? We think they must be referring to HCA2432/2007, in which Capital Union Inc (Capital Union) sued CRIGHK, and applied for "summary judgement" (which basically means a judgement for the plaintiff without trial of the issues, if the case has no realistic defence). The "principal shareholder" of Capital Union was Eugene Chuang. The claim was based on two loans made by Capital Union to CIGHK dated 15-Aug-07 for $100m and 23-Aug-07 for $50m.
The judgement continues:
Mr Chuang says that he agreed that the Plaintiff would lend the Defendant a total of HK$150,000,000 to purchase shares in Forefront, .... He says that Mr Wang gave him authority to purchase Forefront shares on behalf of the Defendant, using the proceeds of the loans, and that he duly did so, acquiring a total of 140 million shares in Forefront for the Defendant on 14, 15 and 22 August 2007, at a total consideration of HK$204,135,963.38 using the loan from the Plaintiff and the margin facilities from Chung Nam"
This sounds implausible to us, because in effect, CRIGHK would be getting a 100% loan from Mr Chuang's companies, without any collateral, against a small-cap stock which, even on a good day, you could not borrow more than 50% for. But we continue with the judgment:
"The Defendant’s version of events is very different. It says that it was in fact Mr Chuang who wanted to acquire shares in Forefront, and that he suggested that instead of doing so himself, or through companies controlled by him, he should do so using the name of the Defendant. He explained to Mr Wang that by doing this, it would create the impression that a substantial Mainland company associated with the Ministry of Railways was acquiring a significant stake in Forefront, which had just acquired the shareholding in Natural Harvest and thus an interest in the joint venture. This would be likely to cause the value of the Forefront shares to rise, to Mr Chuang’s advantage. The Defendant says that Mr Wang reluctantly agreed to this, as he did not want to jeopardise the substantial investment that was to be made in the joint venture."
Now that sounds much more plausible - using a big name to promote the stock.