Canadian Hedge Fund Researcher Sues Silvercorp Over False Imprisonment in China

A researcher for a Canadian hedge fund manager who claimed that ore estimates at a Chinese Mine owned by Silvercorp Metals were overstated and misrepresented has filed a lawsuit accusing the mining company of conspiring with Chinese authorities to have him arrested and detained.

Kun Huang was stopped at the Bejing airport by Chinese authorities in December of 2011, strip searched, detained until he received a single-day, closed-door trial, and subsequently imprisoned until July 17 of 2014. Mr. Huang spent parts of his two-and-a-half year sentence locked-up in a 320 square foot cell with more than 30 people, where he lost 40lbs. Due to a lack of space in the cell, he was forced to sleep on the floor with his head only feet away from a hole in the ground used as a toilet.

Now back in Canada, on August 19, 2014 Mr. Huang filed a lawsuit in the Supreme Court of British Columbia claiming that Silvercorp was behind his detention as punishment for his research of the company, which caused a sharp drop in the Company’s share price when Mr. Huang’s team’s revelations were made public. In his lawsuit, Mr. Huang asserts that the Chinese police acted as Silvercorp’s agents with the company giving them financial support “to falsely imprison and then later knowingly bring baseless charges against Mr. Huang.”

According to the Globe and Mail, a 2012 investigation undertaken by the newspaper revealed evidence that “a Silvercorp subsidiary paid for hotels rooms used by police who investigated Mr. Huang, and that those investigators at one point used a private car owned by that subsidiary. A Silvercorp regulatory filing also contained information that appeared to come from Mr. Huang’s computer, which was in the possession of the police.”

Mr. Huang is pursuing his action in Canada because he believes that the Canadian legal system is his only chance at vindication, claiming that for him “[t]here is no justice in China”.

For further information, please see today’s article in the Globe and Mail: Canadian sues Silvercorp Metals over ‘false imprisonment’ in China.