Aon subsidiary White Rock Insurance is suing China Construction Bank (CCB), alleging a bank employee played a key role in the multi-billion-dollar Vesttoo reinsurance scandal.
White Rock’s lawsuit was filed in New York state court and claims CCB wrote the “lion’s share” of the hollow letters of credit showing $3bn in allegedly “useless” collateral that helped convince companies to do business with Vesttoo.
The suit claims that CCB was negligent and committed fraud in doing so, which cost White Rock “hundreds of millions of dollars in damages, including the lost premium amounts, incurred claim amounts and legal fees”.
White Rock is seeking at least $140mn in damages, plus interest and other financial losses.
“China Construction Bank’s direct role in the issuance of fraudulent letters of credit enabled the fraud, and the bank should be held accountable for the harm it has caused,” a White Rock spokesperson said.
CCB could not immediately be reached for comment.
Vesttoo was an Israeli fintech startup designed to connect insurance companies with capital market investors acting as an alternative to more traditional reinsurers. But a 2023 investigation determined many of the letters of credit backing the startup were fraudulent, leading to Vesttoo’s 2023 Chapter 11 bankruptcy filing.
The new lawsuit argues China Construction Bank employee Chun-Yin Lam incorrectly told White Rock and other companies that the letters – which represented more than $2.8bn in collateral – were authentic.
The employee did so using a China Construction Bank email, and while representing himself as an employee of the bank.
White Rock, relying on those assurances, then did business with Vesttoo, acting as a segregated accounts company that took money from insurers and allowed them to transform the assets into reinsurance in Bermuda.
“CCB was the lifeline for the Vesttoo fraud,” the lawsuit commented. “Without CCB, the Vesttoo fraud could not have occurred: none of the Vesttoo reinsurance transactions would have closed or survived had Mr. Lam not transmitted and confirmed the LOCs.”