By Amy Chen, with reports from Duncan Anderson
A Canadian forestry product exporter is suing one of China’s State-owned logging companies operating in British Columbia for allegedly supplying “80% rotten logs” and tricking the exporter into assuming the forestry company’s debts and tax obligations while failing to pay workers, according to a lawsuit filed at New Westminster law courts.
Baljit Gill, the founder and CEO of Surrey, BC-based Northcrest Energy Corp(NEC) is seeking damages of over $4 million from Richmond, BC-based Canada Forest Industrial Group Ltd (CFIG), its subsidiaries, and directors XueDian Liu, XinLin Huang, Ian Mallmann, Ling Jin, Jiaming Zhu, Wei Jiang and Paul Zhang – a prominent West Vancouver Realtor with Nu Stream Realty.
Corporate records for Canada Forest Industrial Group Ltd show it to be a fully-owned subsidiary of Zaozhuang Xin Zhong Xing (XZX) Industrial Company Ltd, which, according to Canadian Securities Exchange (CSE) filings, is “a large, diversified state-owned Chinese corporation located in Zaozhuang, China.” [1]http://thecse.com/sites/default/files/filings/XZX_134638_form_2a_-_annually_updated_listing_statement_2012.pdf
XueDian Liu, is listed as the President and CEO of both CFIG and and XZX.
Gill alleges in the complaint that CFIG’s Chief Financial Officer Xinlin Huang of leading her to believe that CFIG was a major player who could supply NEC’s needs.
“Ms. Huang repeatedly made, fraudulent and deceitful references, to her supposed access to both capital markets and “big wigs” in China – her successes in taking multiple Corporations public in Conjunction with her spouse Mr. Dennis Petke,” Ms. Gill states in the Notice of Claim filed on September 29. “These statements, slick presentations, communications via emails, telephone calls, skype calls with supposed bigwigs’ in China all were structured towards one purpose to induce and entice the plaintiff in invest heavily in a working relationship with the Defendants.”
Believing XinLin Huang’s words, NEC agreed to pay CFIG’s workers $3.2m in exchange for the forestry company shipping 30,000 Green Metric Tons in August 2016, the lawsuit states.
However, when the logs arrived in China in December 2016, Ms. Gill was alarmed to hear from her clients that the logs were of inferior quality, according to the complaint.
“Ms. Gill immediately notified CFIG when the shipment failed to the contracted quality and quantity requirements as the overseas client in China threatened to reject the entire order – seeking damages for the entire transaction amount, the ocean freight, China Port charges, Customs China in addition to additional damages,” the statement of claim reads.
As a result of CFIG’s actions, the losses suffered by NEC’s clients were $592,298.61, for which Gill sent a letter of claim to CFIG via a solicitor, according to the lawsuit.
But Gill soon found out that those losses were not her only problem, the lawsuit alleges.
Canada Revenue Agency informed Gill that CFIG had neglected to make mandatory payments to the CRA for employee deductions, and as NEC had been paying the employees on CFIG’s behalf, the tax agency seized NEC’s bank accounts, according to the lawsuit.
Realizing that CFIG’s fraud was now no longer a civil matter, Gill filed a complaint for Criminal Fraud with the RCMP Forest Crime investigation Unit, the lawsuit claims.
According to the complaint, former employees and contractors for CFIG and its subsidiaries have not been paid and the Employees are pursuing a claim with Employment Standards against CFIG.
“They are fully aware of the agreement between” CFIG” and “NEC” and fully supportive of “NEC” and have been most vocal that this was a premeditated effort by “CFIG” to defraud all the parties,” the statement of claim reads. “It appears the additional claims and support of the employees of CFIG further lead the Plaintiffs to believe that the Defendants’ endgame or intentions were to avoid meeting their contractual and statutory obligations while unjustly enriching themselves at the detriment of others.”
Gill is claiming in the lawsuit a certificate of pending litigation against the directors’ properties, including Paul Zhang’s two West Vancouver properties, as well as interlocutory injunctive relief to prevent the sale and/or transfer of assets of CFIG and its subsidiaries.
“Due to the magnitude of the civil fraud orchestrated by the Defendants and the fact that majority of the Directors of the firms are not resident in Canada with the remaining Directors’ posing significant flight and asset risks to avoid compensating the Plaintiffs,” the Statement of Claim reads. “To this effect, the Plaintiffs’ request the Courts to provide direction to the Canada Border Services Agency to prevent the flight of any and all Directors/Defendants.”
“The seriousness and complexity of the intricate fraudulent scheme orchestrated by the Defendants to unjustly enrich themselves to the severe detriment and hardship of the Plaintiffs – causing long lasting financial and reputational damage to the Plaintiffs’ (the full extent of which is still being assessed necessitating the requirement for the Defendants’ records),” Gill concludes in the complaint. “For their reprehensible damage to the Plaintiffs and to prevent further fraudulent activity impacting the Plaintiff and others, the Courts are requested to remove the Defendants’ from serving as Directors or Officers of any firms registered and operating in British Columbia, Canada.”
“I can confirm that we have received a report and are now in the process of reviewing the information to determine whether an investigation will be warranted,” RCMP Cpl. Janelle Shoihet told ThinkPol in an email.
Defendant Xinlin Huang denies the claims made by NEC.
“CFIG has been made aware of a claim made against it and others by Northcrest Energy Corp and Baljit Gill,” Huang told ThinkPol. “The allegations being made are without merit and will be defended vigourously. Legal counsel have been retained and have been instructed to take steps to have the claim struck.”
We have reached out to Paul Zhang for comment, but have not yet heard back from them.
We were unable to reach any officials from the Employment Standards Branch of the BC Ministry of Labour for comment.
None of the allegations the defendants has been tested in court.
ThinkPol needs your help to keep going. While other media outlets are content reproducing industry press releases, we carry out painstaking data analysis, spending hours obtaining, and then combing through the data. And the data isn’t free. Each court record and land title search costs us $12. Each corporate record costs us $7.
[Photo Credit: David Stanley]
References [ + ]
| 1. | ↑ | http://thecse.com/sites/default/files/filings/XZX_134638_form_2a_-_annually_updated_listing_statement_2012.pdf |