DEUTSCHE BANK AG The lawsuit by New Jersey-based Ness is the latest case involving HNA, which has come under U.S. and European scrutiny after a $50 billion worldwide acquisition spree that included stakes in Deutsche Bank and Hilton Worldwide Holdings Inc.
HNA is part of a consortium that agreed in January to buy a majority stake in SkyBridge Capital LLC, a U.S. hedge fund investment firm founded by Anthony Scaramucci, a former aide to U.S. President Donald Trump.
In the lawsuit filed last week in the Supreme Court of the State of New York, Ness claimed that HNA had caused it financial harm by not using what it called "best efforts" to get regulatory approval for its takeover of a Ness unit.
HNA's Beijing-based subsidiary, Pactera Technology International Ltd, had agreed in March to buy Ness' unit, Jersey Holding Corp, according to the court filing.
The deal needed a greenlight from the Committee on Foreign Investment in the United States (CFIUS), an intra-government agency that scrutinizes for national security concerns foreign groups' purchases of U.S. assets.
According to the lawsuit, between July and October, CFIUS sent HNA and Pactera at least 77 follow-up questions about its ownership and shareholding structure pertaining to HNA's takeover of Jersey Holding as well as SkyBridge Capital.
CFIUS often looks at whether foreign governments have any involvement in a U.S. acquisition. In a case earlier this year, it cited the role of the Chinese government when rejecting the acquisition of a U.S. chipmaker by a Chinese-backed private equity fund.
HNA has been waiting for nearly a year for CFIUS to approve its investment in SkyBridge Capital.
The Ness lawsuit claimed that HNA and Pactera "covertly worked to evade and frustrate" CFIUS' review of the investment by "discussing, planning, orchestrating and implementing various schemes to disguise the true nature of their organisations, corporate structures and ownership."
Ness and a CFIUS spokesperson declined to comment. HNA did not respond to requests for comment.
SkyBridge spokeswoman Woomi Yun declined to comment.
The lawsuit said HNA and Pactera disclosed to CFIUS that HNA Founder Chen Feng was a member of the Chinese Communist Party and held a "current government position in China."
The lawsuit also said HNA and Pactera "revealed additional ties to the Chinese government" and disclosed a number of loans from China's government, including two loans worth over $175 million. No further details were given.
HNA, which has fielded many questions about its ownership over the past year, tried to address issue in July by creating New York-based Hainan Cihang Charity Foundation Inc to act as its single biggest stakeholder with a 29.5 percent stake.
In its lawsuit, Ness claimed that HNA and Pactera told it that the charity had "chosen not to be tax-exempt to avoid U.S. federal regulations involving corporate ownership."
The lawsuit cited CFIUS staff as saying that most of their questions to HNA involved "the 'core' issue of HNA Group's ownership structure, which presented an unresolved national security issue."
HNA is being investigated by the German financial watchdog over its stock market disclosures, and the Swiss Takeover Board said in November that HNA had given partially untrue or incomplete information when it took over a Swiss company last year.
HNA's heavy reliance on leverage to fund its investments has raised its financing cost, prompting some credit rating agencies to downgrade its creditworthiness.
(Reporting by Koh Gui Qing; Editing by Carmel Crimmins and Richard Chang)
