Original title: fake gold case brushes screen again! Shaanxi High Court ruled that PICC indemnity to the trust 820 million? The truth is... Source: China Fund Daily

Do you still remember the 10 billion gold fraud case that exploded in June this year?

Kingold Jewelry Inc, one of the largest gold jewelry manufacturers in China at that time, pledged a large amount of gold financing to a number of financial institutions, but the gold was tested and found to be fake gold.

The institutions involved include Minsheng Trust, Dongguan Trust, Anxin Trust, Sichuan Trust, Changan Trust and so on.

At that time, in the relevant Golden Phoenix Trust Plan, the insurance company, as an insurer, presided over the whole process of the delivery of pledged gold, including but not limited to the process of release, testing, transportation, inventory and storage of pledged gold.

When the gold was revealed to be fake, trust companies made claims with PICC one after another, but PICC property insurance believed that Wuhan Jinhuang used fake gold to insure and was suspected of insurance fraud, so the insurance policy contract was invalid and PICC did not need to pay compensation.

On October 10, the Shaanxi Provincial higher people's Court issued a final ruling on the Wuhan Jinhuang fake gold case, which attracted attention from all walks of life.

PICC was finally ruled in the "fake gold case".

Take full responsibility for compensation?

On October 10, the civil ruling issued by the Shaanxi Provincial higher people's Court showed that it supported the judgment of first instance, rejected the appeal of PICC Wuhan Branch and upheld the original ruling. According to the civil ruling No. 149of the first instance (2020) Shaan01 at the beginning of the Republic of China, PICC Wuhan Branch and PICC need to jointly compensate Changan Trust 821 million yuan.

On September 26, 2017, Jinhuang Company (borrower) and Changan Trust (lender) signed the "Changan Ning Jinhuang 3 loan Collective Fund Trust Plan Trust loan contract", which stipulated that the loan amount under the contract was 1 billion yuan. the specific amount of the loan is subject to the total amount contained in the loan IOU and the term of the loan is 24 months.

On the same day, Jinhuang Company (pledgor) and Changan Trust (pledgee) signed the Gold Pledge contract of Changan Jinhuang 3 loan Collective Fund Trust Plan. Jinhuang Company pledged gold to Changan Trust to guarantee the realization of the rights of Changan Trust in the above-mentioned 1 billion yuan loan contract. Since then, PICC Wuhan Branch underwrites the quality and weight of gold for 4784 kilograms of Au999.9 gold issued by Jinhuang Company.

In October 2019, some of the expired products of the "Golden Phoenix Series" of Changan Trust defaulted. Since 2020, a number of trust companies have found that Jinhuang pledged fake gold.

The following are the core contents of the civil order:

Appeal Renmin Insurance Wuhan Branch and people's Insurance Company filed an appeal to our court because of the dispute with the appellee over the contract of Changan trust property insurance, which was not accepted by the Xi'an Intermediate people's Court (2020).

PICC Wuhan Branch and PICC appeal request: revoke the civil ruling of Xi'an Intermediate people's Court (2020) Shaan01 at the beginning of the Republic of China, and transfer the case to the Hubei Provincial higher people's Court for trial.

PICC believes that the court of first instance found that the agreed jurisdiction was valid and the facts were not clear. The place of residence of the defendant in this case (PICC Wuhan Branch) and the location of the subject matter of insurance (pledged gold) are both located in Wuhan City, Hubei Province. Moreover, the case involves great interests, the case is complex, and has a major national impact, and the case should be promoted for jurisdiction and transferred to the Hubei Provincial higher people's Court for trial.

In addition, PICC believes thatChangan Trust is not the party to the insurance contract involved in the case, and the insurance contract involved in the case is not binding on Changan Trust. Changan Trust does not have the right to exercise its rights according to the contract signed by others. The ruling of the first instance finds that Changan Trust is a legal and effective "beneficiary", which lacks factual and legal basis. The court of first instance allowed Changan Trust to invoke the jurisdiction agreement of the insurance contract involved in the case, evade the regional jurisdiction specially stipulated by law, and apply legal errors.

However, the Shaanxi Provincial higher people's Court finally held that the Changan Trust, as the lender, issued a loan to the borrower Jinhuang Company, and the borrower Jinhuang Company pledged the lender Changan Trust with sufficient gold to provide guarantee for the repayment of the loan. however, the quality and weight of gold shall be insured by PICC Wuhan Branch as the insurer and the insured Jinhuang Company. The single beneficiary insured by Jinhuang Company is Changan Trust.

As the "single beneficiary" of the insurance contract involved in the case, Changan Trust brought a lawsuit to the court of first instance with the agreed jurisdiction in the "Special Agreement list" attached to the insurance contract signed between Jinhuang Company and PICC Wuhan Branch. The jurisdiction of this case is bound by the agreed jurisdiction, which does not violate the provisions of the law on level jurisdiction and exclusive jurisdiction, and does not exclude agreed jurisdiction. Therefore, the court of first instance has jurisdiction over this case, and it is not improper for the court of first instance to reject the jurisdiction objection raised by PICC Wuhan Branch and PICC.

PICC Wuhan Branch and PICC think that Changan Trust is not the counterpart of the insurance contract or the beneficiary of the insurance policy, but it is clearly stipulated in the "Special Agreement list" of the insurance contract involved in the case: the subject matter of this insurance policy is full gold gold bars, and Changan Trust is the single beneficiary under the property basic Insurance Policy. It is agreed that if the quality and weight of the subject-matter insured gold do not comply with the insurance policy and the special agreement list, it will be regarded as an insurance accident.The insurer shall bear all liability for compensation to the beneficiary.

The Shaanxi High Court held that the first instance ruling expressed the insurance liability of PICC Wuhan Branch as providing guarantee, which was incorrect and should be corrected. As for the issue that Changan Trust does not have the right of action raised by PICC Wuhan Branch and PICC, it does not belong to the scope of jurisdiction objection review, and this case is not involved. The appellant of PICC Wuhan Branch and PICC company cannot be established.

According to the Interface News, Wei Longbin, director of the Shanghai prospective Law firm, said that the objection to jurisdiction is a procedural right stipulated in the Civil procedure Law and only involves the decision to be heard by that court. How to assume responsibility for the entity after the trial depends on the court's decision on the case. This is a jurisdiction procedure ruling, which is tried by the Xi'an Intermediate people's Court, not the result of the second instance judgment, but only the second instance ruling rejecting the appellant's jurisdiction objection appeal. From the current stage, it is not certain that PICC Wuhan Branch and PICC need to jointly compensate Changan Trust for 821 million yuan. At present, the case is still under substantive trial, and the result has yet to take effect.

A review of the 10 billion fake gold case

Kingold Jewelry Inc, one of China's largest gold jewelry manufacturers, pledged a large amount of gold financing to a number of financial institutions, but the gold was tested and found to be fake gold.

The institutions involved include Minsheng Trust, Dongguan Trust, Anxin Trust, Sichuan Trust, Changan Trust and so on.

It is reported that the current outstanding financing is about 16 billion yuan, corresponding to more than 80 tons of pledged gold.

According to public information, Kingold Jewelry Inc was founded in August 2002, changed into a joint-stock company in October 2007, and was successfully listed on NASDAQ on August 18, 2010. stock code: KGJI.

According to its official website, Kingold Jewelry Inc is a large gold jewelry manufacturer integrating R & D, design, production, manufacturing and wholesale, and is one of the largest gold jewelry manufacturers in China.

In recent years, Wuhan Kingold Jewelry Inc financing through trust is very frequent, and since the second half of 2019, Kingold Jewelry Inc's multi-term trust plans involving Changan Trust, Dongguan Trust, Minsheng Trust and other companies have been overdue, and the scale of related products has totaled several billion yuan. A number of trust institutions involved then initiated judicial proceedings, and the court seized the gold pledged by Kingold Jewelry Inc in accordance with the law.

It is understood that when the above-mentioned Kingold Jewelry Inc-related trust was established, it set up "double insurance" risk control measures by pledging physical gold and underwriting by insurance companies.

Among them, the subject-matter gold delivered by the insurer to the beneficiary shall be tested by a third-party testing institution with gold identification qualification recognized by both parties. If the quality and weight do not comply with the agreement of the insurance policy, it shall be regarded as an insurance accident, and the insurer shall bear all liability for compensation.

Take the risk control measures of the Changan Trust-Kingold Jewelry Inc loan No.2 pooled fund trust plan:

1. Gold pledge:

Jinhuang Company provides its legally held physical gold pledge (static pledge) which is not lower than the AU9995 standard of the Shanghai Gold Stock Exchange. Before the trust loan, the principal pledge rate of the pledge is controlled within 70%.

2. GuaranteeJia Zhihong, the legal representative of the company, undertakes the guarantee of unlimited personal liability.

3. Monitoring measures:

[pledge management] the physical gold pledged by ① is directly stored in the safe deposit box of Wuhan local commercial bank, which is sealed. During the period of ② pledge, there will be no database inspection (to ensure the safety of the pledged goods), and the safe deposit box will not be opened, so as to achieve static pledge. [pledge insurance] pledge physical gold to purchase property insurance in China people's property Insurance Co., Ltd. (basic property insurance plus theft and emergency, while the insurance company underwrites the weight and quality of gold), the first beneficiary of the insurance is the trust trustee; after the pledged gold is received and deposited in the bank safe deposit box, the safe deposit box will be sealed, and Changan Trust and PICC property Insurance Company will hold the safe deposit box key and password respectively. During the duration of the project, the safe deposit box can not be opened, so as to achieve static pledge.

As the pledged gold had been insured, the trust company turned to the underwriting insurance company for a claim, which was rejected.

The reason given by PICC at that time was that in the Jinhuang case, PICC Wuhan Branch underwrote property basic insurance. the terms of the insurance contract concluded with Wuhan Jinhuang are the property basic Insurance clauses (version 2009) formally filed by the Bancassurance Regulatory Commission (hereinafter referred to as the "Insurance contract"). Article 5 of the insurance contract clearly stipulates: "during the insurance period, the insurer shall be responsible for compensation for the loss of the subject-matter insured due to the following reasons: (1) fire; (2) explosion; (3) lightning strike; (4) falling of flying objects and other aerial objects." As Article 7 of the insurance contract exempts the liability of "theft and robbery", Wuhan Jinhuang is additionally insured against "the risk of theft and robbery". Therefore, PICC property insurance is only responsible for the "quality and weight does not meet the policy agreement" of gold caused by the above six reasons according to the agreement of the insurance contract.

At the same time, Article 3 of the insurance contract clearly stipulates: "if the following property in this insurance contract has not been specifically agreed upon by both parties and the insured value is specified in the insurance contract, it does not belong to the insured subject matter of this insurance contract: (1) gold and silver, jewelry …..." In view of the limitations of the above provisions, the two parties will extend the insurance of the gold subject by adding a special agreement. As an attachment to the insurance contract, the special clause cannot exist independently without the insurance contract; the agreements of both parties on insurance types, occurrence of insurance accidents, liability exemption and other matters are still based on the insurance contract, that is, the agreement of the "property basic insurance clause (version 2009)" is basically followed, and the attribute of the property basic insurance has not changed.

In addition, Article 26 of the insurance contract clearly stipulates: "when the insured claims for compensation, he shall provide the insurer with the following certificates and information:..." And "if the applicant or the insured fails to perform the obligation of providing documents agreed in the preceding paragraph, resulting in the insurer being unable to verify the loss, the insurer shall not be liable for compensation for the part that cannot be verified." Except that this article clearly stipulates that the subject of the claim for insurance money is the insured, neither the insurance contract nor the special agreement clause stipulates that the "beneficiary" has the right of claim for insurance money.

PICC said that the insurance claims filed by trust companies and other institutions are not in line with the insurance contract.

There is a tug-of-war between trust companies and insurance companies.

Centering on risk prevention and control, PICCTook the initiative to respond to the Jinhuang incident in Wuhan. "Wuhan Jinhuang is insured with false gold and is suspected of insurance fraud and other criminal offences. according to the provisions of the Insurance Law and the contract Law, the insurance contract is invalid, so we do not bear the liability for compensation. Xie Yiqun, executive director and vice president of PICC Group, vice chairman and president of PICC, said.

However, the problems of PICC in the company's internal control and risk management exposed by the Wuhan Jinhuang incident are unavoidable. In this regard, Xie Yiqun said frankly, "this incident has sounded the alarm to the company, the company attaches great importance to risk prevention and resolution, strict and strict, comprehensively strengthen risk management and compliance system construction, and firmly lock the bottom line that systemic risks do not occur."

Earlier, Zhu Yuguo, first-level inspector of the risk disposal Bureau of the Bancassurance Regulatory Commission, pointed out that what was exposed behind the Wuhan Jinhuang incident was the non-existence of internal control and risk management of financial institutions. According to the information disclosed by the Bancassurance Regulatory Commission, public security and judicial organs have been involved in the investigation.