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CITIC LIMITED
Notes to the Consolidated Financial Statements
For the six months ended 30 June 2016
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31 Contingent liabilities and commitments
(continued)
(d) Guarantees provided
(continued)
Included in the above table, the Group’s counter guarantees issued to related parties and third
parties as at the balance sheet date are as follows:
30 June
2016
31 December
2015
HK$ million
HK$ million
Related parties
213
146
Third parties
9
99
222
245
(e) Outstanding litigation and disputes
The Group is involved in a number of current and pending legal proceedings. The Group
provided for liabilities arising from those legal proceedings in which the outflow of economic
benefit is probable and can be reliably estimated in the consolidated balance sheet. The Group
believes that these accruals are reasonable and adequate.
(i) The Hong Kong Securities and Futures Commission (the “SFC”) Investigation
Following the Company’s announcement of a foreign exchange related loss, on 22 October
2008, the SFC announced that it had commenced a formal investigation into the affairs of
the Company. On 3 April 2009, the Commercial Crime Bureau of the Hong Kong Police Force
began an investigation of suspected offences relating to the same matter.
The SFC announced on 11 September 2014 that it has commenced proceedings in the
Court of First Instance of the High Court of Hong Kong (the “High Court”) and the Market
Misconduct Tribunal (the “MMT”), respectively, against the Company and five of its former
executive directors.
The SFC alleges that the Company and the former directors had engaged in market
misconduct involving the disclosure of false or misleading information about the Company’s
financial position in connection with losses that the Company had suffered through its
investment in the leveraged foreign exchange contracts.
In the action instigated by the SFC at the MMT, the SFC is asking the MMT to (i) determine
whether any market misconduct has taken place, and (ii) identify persons who had engaged
in such misconduct. In the event that the MMT makes determinations of market misconduct
against either the Company or the former directors, it is understood that the SFC will seek
from the High Court orders against those who have been found to have engaged in market
misconduct to restore affected investors to their pre-transaction positions or to compensate
affected investors for their losses. The SFC has not yet quantified the amount of such
restoration or compensation sought in the proceedings in the High Court, which have been
stayed pending the MMT results.
The MMT hearing was completed in July 2016 with the outcome pending.