Aon subsidiary White Rock has taken China Construction Bank (CCB) to court over its “direct role” in the letters of credit (LOCs) fraud that led to the collapse of insurtech Vesttoo.
Filed in the Supreme Court of the State of New York, White Rock’s US$140 million lawsuit against the Chinese lender spans fraud, fraudulent misrepresentation, fraudulent concealment, negligent misrepresentation, and negligence as its causes of action.
An AM Best report quoted part of the filing as stating: “It was not that Vesttoo simply used CCB’s logo on a forged document and White Rock took its word for it. Rather, an inside man at CCB – an actual CCB banker acting for CCB as a relationship manager – represented to White Rock, its auditors, and other market participants that the LOCs were authentic.”
The LOCs, which were used to collateralise reinsurance transactions, ended up not being honoured. A bulk of the fraudulent documents supposedly came from CCB, whose involvement, the Aon unit argues, caused cedents to lose at least US$140 million that was paid into White Rock cells.
“Vesttoo turned out to be a total sham, sustained by over US$3 billion of useless collateral,” reads part of the complaint, as reported by Artemis. Of the sum, more than US$2.8 billion is being linked to CCB.
Meanwhile, a spokesperson for White Rock declared: “White Rock’s lawsuit against China Construction Bank is another step in our efforts to maximise recoveries for clients impacted 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, the harm included White Rock being placed in provisional liquidation proceedings by the Bermuda Monetary Authority.
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