(Bloomberg) -- A firm controlled by Hong Kong financier Lee Seng Huang won a default ruling against the former boss of CMIG International Holding Pte Ltd. in a lawsuit claiming he helped conceal $769 million in loans to the investment firm’s majority owner, according to a Singapore High Court ruling.

The investor’s firm, Sun Hung Kai Capital Ltd., holds 4.6% of CMIG International, which is acting as the claimant in the June lawsuit against its former executives.

The court issued a “default judgment” in August against Liao Feng, the former chief executive officer of CMIG International, because he has not appeared to contest the claims he had provided loans without proper due diligence and approval to units of China Minsheng Investment Co., which controls 81% of CMIG International.

Liao failed in his fiduciary duties and was declared to be jointly “severally liable” with any of the three other defendants who are found liable in the ongoing suit, according to the court. Liao was alleged to help arrange at least five loans to units of China Minsheng Investment from 2017 to 2019, causing “significant cash outflow with no apparent prospect of recovery,” according to the lawsuit. The legal action involves three other former directors who are contesting the claims.

China Minsheng Investment, which once aspired to be the country’s answer to JPMorgan Chase & Co., came under pressure in 2019 amid a broader crackdown on lending in China and was forced to restructure after failing to make bond payments. The group was established in 2014 to help Chinese businesses expand internationally. 

The directors allegedly concealed loans as well as their eventual default, according to the suit. Minority shareholders at CMIG International started questioning the transactions at a July 2018 board meeting but were told in September the following year that no formal recovery would be pursued to avoid “crystallizing an event of default” for its parent company, it said.

Liao, whose whereabouts are unclear, couldn’t be reached for a comment.

The three other defendants include former CMIG International Chairman Lee Eun Hyung and director Raymond Tan Kim Han. Both Liao and Lee, who’s now co-vice chairman of Hana Financial Group, worked closely with Dong Wenbiao, the founder of China Minsheng Investment, according to the suit.

Dong retired from the firm in 2018 while Liao and Lee resigned from the board in November 2019 and February 2020, respectively. 

The attorney for Lee and Tan, Joseph Lee at LVM LAW Chambers in Singapore, said the court decision doesn’t affect his clients who continue to maintain a defense. “A default judgment is not the result of an adjudication of the merits of the action,” he said in an email.  

None of the loans have been repaid and the lawsuit against the other defendants is ongoing, Sun Hung Kai said in a statement. China Minsheng Investment didn’t respond to requests for a comment.  

As of July 31, 2020, CMIG International suffered a loss of $743.1 million, comprising $484.7 million in principal and $258.4 million in interest. The six loans fell due in 2018 and 2019, and the delay in recovery increased the chance of writing off the receivables thus weakening the firm’s financial position, according to the statement of claims.

(Adds details of loans and interests in last paragraph. An earlier version of this story corrected ourth paragraph to show Liao was declared ‘severally’ liable rather than ‘severely’)

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