Investors sue PetroChina for violating U.S. securities laws
U.S. District Judge Edgardo Ramos in Manhattan dismissed claims against Chinese oil giant PetroChina (ticker: PTR) regarding declines in the company’s share price after company officials were included in an anti-graft probe initiated by the Chinese government. The lawsuit claimed PetroChina and individual defendants violated U.S. securities laws by concealing “bribery, political corruption, and undisclosed related party transactions,” reports Reuters.
The lawsuit sought to recoup losses suffered by purchasers of PetroChina securities from April 26, 2012 to December 17, 2013, attributable to declines in the company’s share price, as news about alleged wrongdoing started to become public.
Among those being sued in the U.S. case was former China National Petroleum Corp. (CNPC) general manager Zhou Yongkang, who was sentenced to life in prison by the Chinese government on graft charges. CNPC is the controlling shareholder in PetroChina.
The judge said that the plaintiffs were unable to prove that PetroChina made false statements about its corporate governance practices or its internal controls over financial reporting. While the complaint “certainly suggests” that the Chinese government suspected wrongdoing by PetroChina officials, “plaintiffs never specify when that conduct occurred or how it rendered PetroChina’s public statements false,” Ramos wrote in his decision.
He went on to say the complaint “maintains that the PRC seized over $14.5 billion in assets from Yongkang in connection with its corruption investigation. However, it does not indicate when this event occurred, nor does it specify when Yongkang undertook any acts of corruption, what they consisted of, or whether they had any connection to PetroChina whatsoever.”
PetroChina is the country’s largest oil and gas producer and distributor, according to the company website. In 2014, the company’s total crude oil output reached 945.5 MMBO, while natural gas output reached 3,028.8 Bcf. The company’s market value was roughly $296 billion as of Monday, August 3, 2015, according to data from Reuters.
