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  • Aug 28, 2014
  • Updated: 2:35am

China Resources (Holdings)

China Resources (Holdings) is a state-owned conglomerate registered in Hong Kong. The company is the parent of China Resources Enterprise, China Resources Power and China Resources Land, which are listed as Hang Seng Index constituent stocks and known as the Three Blue Chips of China Resources.

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Whistle-blower files ICAC complaint over alleged graft at China Resources Power

PUBLISHED : Monday, 05 August, 2013, 7:48pm
UPDATED : Tuesday, 06 August, 2013, 3:04am

Mainland whistle-blower Li Jianjun has lodged complaints with Hong Kong's graft-busters and commercial crime investigators about alleged irregularities and corruption in a mining assets purchase by China Resources Power Holdings (CRP).

He also made fresh allegations against former CRP chairman Song Lin and officials at the Shanxi Department of Land and Resources, saying the latter played a role in granting exploration rights illicitly in two mines to the assets' seller Shanxi Jinye Coal Coking Group. The rights were subsequently transferred to Hong Kong-listed CRP.

"Song is allegedly involved in conspiring with a mainland tycoon and used illicit asset valuations to support a dodgy acquisition," Li said, adding he would submit documents, including a contract for the deal, related asset valuation reports and other information to the Independent Commission Against Corruption.

Song is chairman of state-backed China Resources (Holdings), parent of CRP. The retail-to-energy giant is 187th on Fortune magazine's Global 500 list this year. It reports to the central government, making Song's post equivalent to a vice-minister's.

After coming out of the ICAC's headquarters, Li said he was told to expect a response within 48 hours. He also separately lodged a complaint to the police commercial crime bureau.

An ICAC spokesman would not comment on individual cases, but said it would follow up on any complaint received.

Li, a former Shanxi investigative journalist, made the complaints on the sidelines of the first day of hearing of a lawsuit by six CRP minority shareholders. They allege that 20 former and current CRP directors failed in their fiduciary duties to protect shareholders' interest by causing CRP to buy two coal mines without valid exploration rights, and failed to cancel the deal and recover money from the seller.

They claimed that official documents showed that the rights expired in 2007 and 2009, and therefore the seller, Shanxi Jinye Coal Coking Group had no right to sell them. They are seeking unspecified damages. CRP shares have fallen since the allegations emerged in March.

Li claimed Jinye did not have proper rights to the mines before it sold them to CRP, since state-owned China United Coal Bed Methane had claimed rights on the mines after Jinye's rights expired. He claimed this was uncovered by a National Audit Office investigation.

He also alleged that corrupt officials in the Shanxi Department of Land and Resources helped Jinye re-obtain the rights illegally, which were transferred to CRP on July 25. Calls to Jinye and the department went unanswered.

Benjamin Yu, SC for CRP argued yesterday that since the assets were bought by a joint venture via an indirect subsidiary, by law only that venture could sue. "[CRP] doesn't seem to have any possible right for losses sustained by CR Taiyuan [the venture]."

Mr Justice Andrew Chan Hing-wai seemed to take issue with this, saying funding of the venture partly came from a CRP subsidiary.

Yu also said an audit and risk committee of four CRP independent non-executive directors and a non-executive director found no impropriety in the deal and was "consistent with [CRP's] strategy".

Additional reporting by Danny Mok

 

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