China Zhongwang seeks legal advice after the company and its owner accused of ditching U.S. tariffs

After Liu Zhongtian, the largest shareholder of China Zhongwang Holdings Ltd had been accused of ditching the U.S. about US$1.8 billion in tariffs through a scheme, the company said on Sunday it was seeking legal advice on the matter.

China Zhongwang said in a statement to the Hong Kong stock exchange that neither the company nor Liu had been served any notice in relation to the legal proceedings.

“The company takes seriously any allegations that it may have violated any law, and is seeking legal advice in relation to the alleged proceeding,” it said in the statement.

The company assured its shareholders that they would be informed of further developments related to this. Zhongwang had previously described smuggling allegations as “misleading” and “without any factual basis.”

According to Refinitiv Eikon data, Liu stepped down as Zhongwang chairman in 2017 but remains its largest shareholder with a 74.16% stake.

“If the allegations were proven in court, the company could face monetary penalties,” Zhongwang said in the statement.

Zhongwang’s share price fell by 14.2% on August 1, after the indictment was reported, and fell a further 7.6% on Friday to end the week on HK$3.18 ($0.4062), its lowest close since October 2015.

Zhongwang’s statement also adds that the company is operating as usual and so far no adverse impact has been felt on the company’s operations or its financial conditions. Further announcement will be published if there is any situational change.