China Resources (Holdings)

Whistle-blower accuses China Resources chief of corruption

Mainland journalist alleges in microblog letter that China Resources chairman Song Lin was involved in dealings that lost state billions

PUBLISHED : Wednesday, 17 July, 2013, 6:33pm
UPDATED : Sunday, 04 August, 2013, 4:05pm

A mainland journalist working for a newspaper controlled by Xinhua yesterday accused the head of a key state-owned conglomerate of corruption and wrongdoing that "led to the loss of billions in state-owned assets".

In a letter posted on his weibo microblog, Wang Wenzhi, a principal reporter with the Economic Information Daily, accused China Resources (Holdings) chairman Song Lin and other senior managers of intentionally overpaying for a 2010 acquisition.

I'm levelling allegations against Song Lin because he is the chief culprit. He's the mastermind behind many shady decisions
Wang Wenzhi, reporter with the Economic Information Daily

China Resources (Holdings), a Hong Kong-registered conglomerate, issued a statement last night saying that the weibo posting and reports about it carried by some news outlets were libellous, and had negatively affected the company and the image of its management. It said it reserved the right to sue and claim damages.

"I'm levelling allegations against Song Lin because he is the chief culprit," Wang told the South China Morning Post yesterday. "He's the mastermind behind many shady decisions.

"I received the relevant material from someone and decided to take it into my own hands. I spent about half a year investigating it, including several visits to Shanxi."

Wang accused Song of intentionally buying "poor-quality coal assets" in Shanxi province at an "incredibly" high price and paying the money in advance at irregular intervals, a practice he said may have caused the group to suffer billions of yuan in losses.

Subsidiary China Resources Power (CRP) was part of a joint venture that paid 7.9 billion yuan (HK$9.9 billion) for an 80 per cent stake in the Shanxi Jinye Coal coking group that another party valued at half that price months before the deal, Wang said on weibo.

"I have some more evidence on hand and I'll make it public later," Wang told the Post.

China Resources - ranked 187th on Fortune magazine's Global 500 list this year - operates in sectors including retail, property, finance, gas, construction materials and electricity. It reports to the central government, which mainland media said made Song's position equivalent to that of a vice-minister.

The letter, posted on Weibo at 1.30am, attracted thousands of comments, both approving and critical, before it was taken down at about 4pm. Wang said he had not removed it.

Several mainland news websites, including those of Xinhua and the Communist Party mouthpiece People's Daily, carried reports on the posting but later took them down.

Wang said he had posted the letter during a business trip to Guangzhou and the paper had summoned him back yesterday to discuss the matter.

He said he had reported the case to the party's anti-graft watchdog, the Central Commission for Discipline Inspection, but had not heard back from it.

Luo Guojun, the paper's deputy editor-in-chief, said posting the letter was Wang's personal decision and had nothing to do with the newspaper.

"It's his civil right to blow the whistle on someone who he thinks has done something wrong, but you shouldn't issue it on behalf of the paper," Luo said.

"How could he have done it before even letting us know? That's not our organisation's spirit. Organisation is important for the Communist Party, right?"

The shares of all five Hong Kong-listed companies under China Resources fell yesterday, with CRP's share price plunging 10 per cent to HK$17.98, wiping HK$10.6 billion off its market capitalisation.

It said yesterday that its board was not aware of any matter relevant to the share price fall or any inside information that should be announced.

A group of minority CRP shareholders filed a lawsuit earlier this month against 20 past and present company directors over related issues. The case will be heard on August 5.