The mystery of alleged negligence by management of China Resources Power in the firm's 2010 acquisition of coal-mining assets in Shanxi province has grown murkier. Official documents show that exploration rights of two mines were transferred by the seller to CRP late last month.
The documents could be used as evidence by lawyers representing six CRP minority shareholders to bolster their allegations of mismanagement in a petition to be heard today in Hong Kong's High Court.
"The documents show the seller didn't have proper exploration rights to sell the assets to CRP," a person familiar with the case told the South China Morning Post.
The minority shareholders 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 exploration and mining rights, and failed to cancel the deal and recover money from the seller.
According to CRP's annual report, it agreed in 2010 to form a 49 per cent-controlled joint venture with Citic Trust - a unit of state-owned conglomerate Citic Group - and the mining assets' seller, Shanxi businessman Zhang Xinming's Shanxi Jinye Coal Coking Group.
The writ, filed on July 5, said Jinye injected a 20 per cent stake in the portfolio of assets in exchange for a 20 per cent interest in the venture; while Citic Trust contributed cash for a 31 per cent stake and CRP paid cash for its 49 per cent stake. The venture agreed to buy the remaining 80 per cent of the assets for up to 7.9 billion yuan (HK$12.1 billion). But government documents showed the exploration right of a mine in Zhongshe expired in late 2007; while that of the other mine, in Hongyatou, expired in early 2009, the writ said. No application was made to renew those permits, the writ added. "Shanxi Jinye had no right or capacity to transfer the exploration rights to [CRP]," it said.
CRP said on July 18 that exploration rights for Zhongshe and Hongyatou were obtained in 2003, and their conversion into mining rights was "suspended due to the subsequent integration of coal mine resources by the local government".
It did not explain what happened to the rights after 2003.
The minority shareholders are seeking unspecified compensation. CRP's share price has plummeted since the claims of overpayment surfaced in March.
A filing at the State Administration for Industry and Commerce and minutes of a shareholders meeting of the joint venture seen by the Post showed that Jinye last year pledged its 20 per cent stake in the venture to China Resources SZITIC Trust, 51 per cent-owned by CRP's parent China Resources (Holdings). The pledged assets backed a 2.62 billion yuan loan to Jinye arranged by CR Trust. CRP declined to comment.