“The bank needs to be held responsible for the damage it has caused.”
Aon subsidiary White Rock has sued China Construction Bank (CCB) for its “direct role” in the letters of credit (LOCs) fraud that led to the bankruptcy of insurtech Vesttoo.
White Rock’s $140 million lawsuit against the Chinese lender was filed in the Supreme Court of the State of New York. The grounds of action include fraud, fraudulent misrepresentation, fraudulent concealment, negligent misrepresentation, and negligence.
According to an AM Best article, the filing stated that Vesttoo did not simply use CCB’s insignia on a fabricated paper and White Rock took it at face value. Rather, an insider at CCB – a real CCB banker working for CCB as a relationship manager – assured White Rock, its auditors, and other market participants that the LOCs were genuine.”
The LOCs, which were used to collateralize reinsurance transactions, ended up not being honored. A bulk of the fraudulent documents supposedly came from CCB, whose involvement, the Aon unit argues, caused cedents to lose at least $140 million that was paid into White Rock cells.
“Vesttoo turned out to be a total sham, sustained by over $3 billion in useless collateral,” reads part of the case, as reported by Artemis. Over $2.8 billion of the total is tied to CCB.
Meanwhile, a White Rock spokeswoman stated that the company’s case against China Construction Bank is another move in its efforts to maximise recoveries for consumers affected by the Vesttoo fraud.
“China Construction Bank’s direct role in the issuance of fraudulent letters of credit enabled the fraud, and the bank should be held accountable for the harm it has caused.”
Aside from the cedents’ losses, White Rock was brought into provisional liquidation proceedings by the Bermuda Monetary Authority.
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