China Resources (Holdings)

China Resources Power mining deal to be completed 'within 20 days'

Beijing steps in to ensure permits are finally signed for controversial Shanxi venture, which has led to graft claims against former chairman

PUBLISHED : Friday, 09 August, 2013, 12:00am
UPDATED : Friday, 09 August, 2013, 5:23am

The controversial 7.9 billion yuan mining rights deal at the heart of corruption allegations against state-backed China Resources Power is expected to be completed in 20 days.

It is a move the company management hopes will settle any doubts over the transaction, a source with first-hand knowledge of the deal said.

The source, who declined to be identified due to the sensitivity of the issue, told the Post Beijing had weighed in to ensure local government officials in Shanxi - where the mines are located - sign permits that should have been inked a year ago. CRP will pay the remaining 3.7 billion yuan (HK$4.6 billion) once they secure the mining rights. It has already paid 4.2 billion yuan.

By completing the deal, the management hopes to send out a message that the company's overall business strategy will not be affected by the controversy.

Li Jianjun - a former mainland journalist whose corruption accusation against former CRP chairman Song Lin sparked the investigation - said yesterday he would pass more information to the Hong Kong law enforcement authorities for them to build a case against CRP's top management.

"I will meet them tomorrow morning," Li said. "I expect it to be a long meeting which may not finish by afternoon."

Li has lodged complaints with the Independent Commission Against Corruption and the police commercial crime bureau about alleged irregularities.

But the source with knowledge of the transaction said there was no case to answer. He said the mainland's once-in-a-decade leadership transition had simply delayed a legitimate deal.

Local officials stopped signing contracts ahead of last autumn's handover of power at the top of the Communist Party. This was then compounded by a reshuffle of local officials that has only recently been completed. CRP insists it is now business as usual.

But Li maintains the transfer of mining rights is illegal because it has not gone through an open auction process.

CRP formed a 49 per cent-owned joint venture in 2010 to acquire an 80 per cent stake in three coal mines and related assets for 7.9 billion yuan.

Li and Wang Wenzhi , a reporter with Xinhua's Economic Information Daily, accused Song of directly ordering the acquisition, despite the mines' lack of proper exploration and mining rights.

Song is now chairman of state-backed China Resources (Holdings), the 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 that of a vice-minister.

Separately, a lawsuit was launched last month 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.