CSRC gives ultimatum to fix irregularities The mainland's securities watchdog has ordered an obscure private enterprise to rectify irregularities arising from its takeover of energy giant Shandong Luneng Group, a deal that gave it control of three listed firms and was seen as a blatant case of stripping of state assets. The China Securities Regulatory Commission said Beijing Guoyuan United must amend the breaches of securities law by the end of next month over its acquisition in May last year of a 57.2 per cent stake in power-to-property conglomerate Luneng. Some analysts said the announcement indicated the mainland leadership was taking steps to unravel the complex transactions which led to what is now believed to be an illegal privatisation of Luneng. The case attracted nationwide attention not least because a number of princelings - children of mainland leaders - were directly or indirectly involved. Until the problems were fixed, Guoyuan would be banned from using its voting rights in Luneng's three A-share listed units - Guangdong Golden Horse Tourism Group, Tianjin Guangyu Development and Shandong Luneng Taishan Cable - the CSRC said. Luneng owns 36.4 per cent of Golden Horse, 20 per cent of Guangyu and 26 per cent of Taishan Cable, all listed in Shenzhen. Guoyuan failed to disclose its interests and make a general offer to buy out other Golden Horse shareholders after it bought Luneng, according to the listed units' statements. The CSRC warning came amid controversy over Guoyuan and its partner buying almost the entire Luneng for a fraction of the company's value in some opaque deals. The influential Caijing magazine reported in January that Guoyuan and privately held Beijing Shouda Group bought a combined 91.6 per cent stake in Luneng for about 3.73 billion yuan from various firms controlled by Luneng's employees. The price was far lower than the 73.8 billion yuan total asset value as given by the National Bureau of Statistics, the report said. Luneng was set up in 1995 as a state-owned company before it was transformed into an employees-controlled entity in 2003 despite Beijing's suspension of transfers of state power assets to employees, Caijing said. The identities of Guoyuan's and Beijing Shouda's controlling shareholders remain a mystery because of the frequent and complex stake transactions. Luneng officials could not be reached for comment. A mainland power sector analyst said the mysterious owners would probably be exposed soon as part of a corruption clean-up. 'When you see public statements from the regulators, it usually means the investigations have been pretty much completed ... one can expect some influential people to be pulled down from important positions soon,' he said. Recent corruption clean-up campaigns have already claimed various high-level central government officials as well as some Shanghai Electric Group officials. Luneng's three units said yesterday in separate stock exchange statements that Guoyuan was found by the CSRC to have failed to comply with securities law and listing rules on disclosure and general offer.