<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>Oei claims Citi's information 'unreliable'
</TR><!-- headline one : end --><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Lee Su Shyan, Assistant Money Editor
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Mr Oei argues that he could not get an accurate picture of his exposure, but Citibank says its figures were estimates for discussion purposes only.
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->BUSINESSMAN Oei Hong Leong has hit back at claims made by Citibank over his foreign exchange losses as the legal battle between the tycoon and the US banking giant goes up a gear.
Mr Oei's reply to the Citibank defence filed a fortnight ago centred on a few key points, including the bank's contention that it could not be responsible for losses racked up by such a highly sophisticated investor making his own investment decisions.
In his reply filed with the High Court on Tuesday, Mr Oei said that this was irrelevant as he was not disputing that he is a highly experienced investor.
'I have been a private banking customer with Citibank for about 30 years,' he said.
Instead, he is arguing that he had depended on Citibank to provide him with accurate and reliable information about his margin positions to aid him in his trading decisions.
In particular, he is alleging that the bank's inclusion of a certain US$50 million (S$72 million) sum in his trading lines had misled him about his trading exposure.
Mr Oei launched his suit against Citibank for negligent mistatement and misrepresentation in May. He claims that he lost $1 billion on his forex investments as a result of this lack of reliable information. He has settled all outstanding amounts with the bank.
Mr Oei invested in various foreign exchange contracts on margins, meaning that he needed only to stump up in collateral a fraction of the total outstanding amount of his trades.
The value of such contracts fluctuated daily, depending on how the currencies moved. The bank calculated the value of all these contracts daily and worked out a total value.
Based on collateral that he placed with Citibank, Mr Oei would have had to top up more funds to maintain the margin level or he may have had a surplus. Individual investors would not normally have the tools to calculate the value of such contracts.
While Mr Oei disputes Citi's figure that he had investment contracts worth as much as US$6.9 billion in February last year, his exposure was definitely in the billions of dollars.
In the middle of last year, Mr Oei wanted to trim his positions to reduce his exposure as he was taking an increasingly bearish view of the economy.
He also wanted to keep a comfortable buffer or margin surplus to withstand any market shocks. In September last year, he had a margin surplus of around US$100 million.
Around this time, a problem cropped up over a disputed deposit of US$50 million.
This deposit, held by a company that is 97.5 per cent owned by Mr Oei, was included by Citibank as part of his overall collateral. The inclusion of the extra US$50 million - without his knowledge - allowed Mr Oei to invest more, to the tune of an additional US$1 billion.
The larger trading line - one that he had not requested or required - led him to 'enlarge substantially his trading portfolio'.
He alleges that Citibank's inclusion of the deposit was unlawful as it would have resulted in a breach of the Companies Act.
Citibank's defence is that it is not Mr Oei's legal adviser.
It also claims that Mr Oei gave his permission from the start that the deposit could be included as part of his overall collateral, something he denies.
He was thus unable to get an accurate picture of his exposure, he says. For example, his margin shortfall figures supplied by Citibank ranged from US$28 million to US$348 million over a couple of days.
It was this unreliability, Mr Oei alleges, that left him with no choice but to liquidate his positions at the height of the market turmoil, leaving him with staggering losses last October.
Citibank's defence is that the margin figures were calculated only for Citibank and not for Mr Oei's purposes. They were not complete and were estimates for discussion purposes only. The bank also added that it did not assume liability for these figures.
Mr Oei has said that such an argument 'is not in line with common and commercial sense'.
He added that if the bank had told him 'that the information it was giving him was unreliable, and that he could not regard it as even reasonably accurate, he would have terminated their business relationship'.
The next step in this closely watched legal battle will be for both sides to examine documents such as e-mail or voice logs, to gather more evidence before a hearing takes place.
Mr Oei is asking the High Court to assess damages.
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Mr Oei is alleging that the bank's inclusion of a certain US$50 million (S$72 million) sum in his trading lines had misled him about his trading exposure.
</TR><!-- headline one : end --><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Lee Su Shyan, Assistant Money Editor
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
Mr Oei argues that he could not get an accurate picture of his exposure, but Citibank says its figures were estimates for discussion purposes only.
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->BUSINESSMAN Oei Hong Leong has hit back at claims made by Citibank over his foreign exchange losses as the legal battle between the tycoon and the US banking giant goes up a gear.
Mr Oei's reply to the Citibank defence filed a fortnight ago centred on a few key points, including the bank's contention that it could not be responsible for losses racked up by such a highly sophisticated investor making his own investment decisions.
In his reply filed with the High Court on Tuesday, Mr Oei said that this was irrelevant as he was not disputing that he is a highly experienced investor.
'I have been a private banking customer with Citibank for about 30 years,' he said.
Instead, he is arguing that he had depended on Citibank to provide him with accurate and reliable information about his margin positions to aid him in his trading decisions.
In particular, he is alleging that the bank's inclusion of a certain US$50 million (S$72 million) sum in his trading lines had misled him about his trading exposure.
Mr Oei launched his suit against Citibank for negligent mistatement and misrepresentation in May. He claims that he lost $1 billion on his forex investments as a result of this lack of reliable information. He has settled all outstanding amounts with the bank.
Mr Oei invested in various foreign exchange contracts on margins, meaning that he needed only to stump up in collateral a fraction of the total outstanding amount of his trades.
The value of such contracts fluctuated daily, depending on how the currencies moved. The bank calculated the value of all these contracts daily and worked out a total value.
Based on collateral that he placed with Citibank, Mr Oei would have had to top up more funds to maintain the margin level or he may have had a surplus. Individual investors would not normally have the tools to calculate the value of such contracts.
While Mr Oei disputes Citi's figure that he had investment contracts worth as much as US$6.9 billion in February last year, his exposure was definitely in the billions of dollars.
In the middle of last year, Mr Oei wanted to trim his positions to reduce his exposure as he was taking an increasingly bearish view of the economy.
He also wanted to keep a comfortable buffer or margin surplus to withstand any market shocks. In September last year, he had a margin surplus of around US$100 million.
Around this time, a problem cropped up over a disputed deposit of US$50 million.
This deposit, held by a company that is 97.5 per cent owned by Mr Oei, was included by Citibank as part of his overall collateral. The inclusion of the extra US$50 million - without his knowledge - allowed Mr Oei to invest more, to the tune of an additional US$1 billion.
The larger trading line - one that he had not requested or required - led him to 'enlarge substantially his trading portfolio'.
He alleges that Citibank's inclusion of the deposit was unlawful as it would have resulted in a breach of the Companies Act.
Citibank's defence is that it is not Mr Oei's legal adviser.
It also claims that Mr Oei gave his permission from the start that the deposit could be included as part of his overall collateral, something he denies.
He was thus unable to get an accurate picture of his exposure, he says. For example, his margin shortfall figures supplied by Citibank ranged from US$28 million to US$348 million over a couple of days.
It was this unreliability, Mr Oei alleges, that left him with no choice but to liquidate his positions at the height of the market turmoil, leaving him with staggering losses last October.
Citibank's defence is that the margin figures were calculated only for Citibank and not for Mr Oei's purposes. They were not complete and were estimates for discussion purposes only. The bank also added that it did not assume liability for these figures.
Mr Oei has said that such an argument 'is not in line with common and commercial sense'.
He added that if the bank had told him 'that the information it was giving him was unreliable, and that he could not regard it as even reasonably accurate, he would have terminated their business relationship'.
The next step in this closely watched legal battle will be for both sides to examine documents such as e-mail or voice logs, to gather more evidence before a hearing takes place.
Mr Oei is asking the High Court to assess damages.
<HR SIZE=1 width="50%">
Mr Oei is alleging that the bank's inclusion of a certain US$50 million (S$72 million) sum in his trading lines had misled him about his trading exposure.
