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by Mike Caswell

Kun Huang, a former employee of short-seller Jon Carnes, has filed a lawsuit in the Supreme Court of British Columbia against Silvercorp Metals Inc., claiming that the company had him unlawfully detained in China for three years. He claims that Silvercorp effectively enlisted the police in China to falsely imprison him with no charges. The detention came after he helped research a well-publicized report that questioned the value of Silvercorp's Ying mine in China.

The allegations are contained in a notice of claim that Mr. Huang, who is now in Canada, filed at the Vancouver courthouse on Aug. 19, 2014. He describes himself as a Canadian citizen who obtained a commerce degree from the University of British Columbia. In 2011, he was working in China for a company called Eos Holdings LLC, which had begun taking short positions in Chinese companies it believed to be overvalued.

The problems, as described in the suit, came after Mr. Huang helped research a report on Silvercorp that appeared on a website called Alfredlittle.com on Sept. 13, 2011. Among other things, the report questioned Silvercorp's reported output from the Ying mine. It stated that the figures Silvercorp was reporting in China were substantially different from the numbers it reported in Canada. The report came amongst questions in general about the true financial position of many Chinese companies, and it placed Silvercorp under considerable public scrutiny.

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