Bloomberg News

RREEF’s Liquidation, Delisting May Be Delayed by Lawsuit

July 08, 2011

(Updates with detailed allegations in second paragraph.)

July 8 (Bloomberg) -- RREEF China Commercial Trust said its planned liquidation and delisting may be delayed after a former building owner sued, accusing the trust manager and its parent Deutsche Bank AG of intimidation and deceit.

Tin Lik, who sold the Gateway Plaza in Beijing to the trust, accused investment bankers at Deutsche Bank of devising a scheme to inflate rents and said they later “coerced” him into paying HK$279 million ($36 million) to cover the shortfall, according to a complaint filed in the High Court in Hong Kong on July 5. Tin is seeking to recover the money.

Deutsche Bank and Deutsche Management representatives, to protect themselves from regulatory investigations, lied to “entrap” Tin into taking responsibility for the scheme, the former owner claimed in the court documents.

Deutsche Bank, RREEF CCT and the trustee, HSBC Holdings Plc, which was also named as a defendant, denied any wrongdoing yesterday in an RREEF filing to the Hong Kong stock exchange.

RREEF China REIT Management Ltd. said it had discovered in 2007 a discrepancy between rents set out in leases and the amount of money actually received by the trust.

“An independent investigation clearly established that a complex fraud was perpetrated against RREEF CCT and in September 2007 Tin Lik willingly paid HK$278,526,708 in compensation for that fraud,” Michael West, a Deutsche Bank spokesman said in an e-mail yesterday. “No action has been taken by Tin Lik in respect of this payment in the intervening four years.”

RREEF said February 2010 it would sell Gateway Plaza, its only material asset, for HK$1.9 billion plus HK$181.1 million owed by the project and bank debt. It also said it would terminate the trust and delist. The lawsuit may delay that plan and result in additional costs, RREEF said.

The defendants are formulating their formal response to the claims, RREEF said.

The case is Tin Lik and Deutsche Bank AG, RREEF China REIT Management Ltd., HSBC Institutional Trust Services (Asia) Ltd., HCCL17/2011, in the Hong Kong Court of First Instance.

--Editors: Joe Schneider, Subramaniam Sharma

To contact the reporters on this story: Joshua Fellman in New York at jfellman@bloomberg.net; Debra Mao in Hong Kong at dmao5@bloomberg.net

To contact the editor responsible for this story: Bruce Grant at bruceg@bloomberg.net


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