PetroChina Co. won dismissal of a securities-fraud lawsuit by investors who accused the company of failing to disclose corruption that exposed it to government investigations and penalties.
U.S. District Judge Edgardo Ramos in Manhattan dismissed the case, agreeing with China’s largest oil and gas producer that the investors failed to make a plausible argument that PetroChina’s annual reports contained statements that were false or misleading at the time they were made.
While the complaint suggests company officials were suspected by the government of wrongdoing, “plaintiffs never specify when that conduct occurred or how it rendered PetroChina’s public statement false,” the judge said in Monday’s decision.
The investors sued PetroChina and some of its former and current officers in 2013, after officials at the firm, a unit of a state-owned company, became entangled in China’s crackdown on corruption.
According to the lawsuit, company officials were involved in “bribery, political corruption, and undisclosed related party transactions.” The judge said the complaint didn’t tie these allegations to the purported false statements in the company’s 2011 and 2012 annual reports.
The complaint “maintains that the PRC seized over $14.5 billion in assets from Yongkang in connection with its corruption investigation,” the judge said, referring to Zhou Yongkang, the former general manager of China National Petroleum Corp., PetroChina’s parent company.
“However, it does not indicate when this event occurred, nor does it specify when Yongkang undertook any acts of corruption, what they consisted of, or whether they had any connection to PetroChina whatsoever,” Ramos wrote.
The case is In re PetroChina Co. Ltd. Securities Litigation, 13-cv-06180, U.S. District Court, Southern District of New York (Manhattan).