Small Chinese Company Tells Goldman To Take A Hike, Refuses To Pay $80 Million In Derivative Losses

Zero Hedge

It appears that even after thoroughly dominating the US legislative, judicial and executive branches, the long tentacles of the squid have been no better than the Mongolian hordes at overcoming the Chinese Wall (which is ironic seeking how easy it is to ignore the same construct internally between the firm’s prop and flow traders…and yes, we will be posting our response to Goldman shortly, we have not forgotten). In the meantime, half a world away, a small Chinese power generator, Shenzhen Nanshan Power, is blatantly refusing to honor contracts with Goldman Subsidiary J. Aron for $80 million in derivative losses, and it appears that China itself has decided to stand behind the small company.

Reuters reports:

Shenzhen Nanshan Power (000037.SZ) (200037.SZ) said in a
statement that it received several notices from J. Aron &
Company, a trading subsidiary of Goldman Sachs (GS.N), for at
least $79.96 million as compensation for terminating oil option
contracts.

“We will not accept the demand by J. Aron for all the
losses and related interests,” said Nanshan, in line with the
stance it took last December.

“We will try our best to negotiate with J. Aron and resolve
the dispute peacefully…but the possibility of using a lawsuit
can not be ruled out when talks fail,” it added.

“J. Aron told us in one notice that if we do not pay the
money, they will reserve the right to launch a lawsuit and will
not send us any further notice.”

The State Assets Supervision and Administration Commission
said in September that it would back state-owned companies in
any legal action against the foreign banks that sold them oil
derivatives, which resulted in losses when oil prices dived
late last year. [ID:nPEK14474]

A Beijing-based Goldman Sachs corporate communication
official declined to comment.

Not sure what Hank Paulson’s former firm would comment: alas the Chinese communist party still has to be filled with Goldman alumni. That being said, this is precisely the track that Goldman has been focusing on for the past few years. At this point, the firm realizes all too well that dominating power politics in China in the near futures is far more critical than complete control over D.C., as there is little the world’s most important company can do domestically in the context of taxpayer capital transfer without a full fledged revolution.

h/t Sean

More articles from Zero Hedge….