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China Resources investigated after allegations

By Bao Chang | China Daily | Updated: 2013-07-20 07:23

China's State-owned assets watchdog vowed on Friday that punishment will be imposed if ongoing auditing uncovers any illegality at China Resources (Holdings) Co Ltd, the Hong Kong-registered conglomerate caught up in accusations of corruption involving State-owned assets.

China Resources is currently being audited. The State-owned Assets Supervision and Administration Commission will act according to the auditing results, the commission said in a brief statement.

The commission vowed to severely punish people who are held accountable according to law if any illegal practices and irregularities are found.

In a statement posted on the Internet on Wednesday, a journalist accused Song Lin, chairman of China Resources, and other senior executives of corruption and wrongdoing that led to the loss of billions of yuan in State-owned assets.

Wang Wenzhi, a journalist at the Economic Information newspaper under Xinhua News Agency, on Wednesday accused Song of overpaying and wrongdoing in China Resources Power Holding Co's acquisition of Shangxi Jinye Coal Coking Group Co Ltd in 2010.

China Resources Power was part of a joint venture that paid 7.9 billion yuan ($1.29 billion) for an 80 percent stake in Shanxi Jinye, which was valued by another company at no more than half of the price paid a few months before the deal's completion, Wang said on his micro blog.

Since Wednesday shares of the electricity producer subsidiary of China Resources have plunged 15.62 percent to the closing price of HK$16.86 ($2.17) in Hong Kong trading on Friday, resulting in a total loss of HK$14.92 billion in market value within three days.

The Central Commission for Discipline Inspection, the Party's anti-corruption and anti-malfeasance watchdog, said it has received accusations about China Resources and related investigations are under way, according to news portal people.com.cn.

Headquartered in Hong Kong, China Resources is a State-owned industrial conglomerate engaging in sectors from real estate, consumables and power supply to cement, medicines and finance. In 2012, China Resources realized total revenues of HK$404.6 billion and a total profit of HK$41.2 billion. It had total assets of HK$939.3 billion.

The company ranked 187th on the Fortune 500 Global list in 2013. It had total operating revenues of $52.4 billion last year.

In response to the allegation, China Resources on Wednesday stated that the reporting about its management group was libelous and had negatively affected the image of the company. It reserved the right to pursue legal action.

However, the company's response did little to cool public concern.

Six minority stockholders of China Resources Power on Thursday launched a lawsuit against 20 directors on the board of the company at Hong Kong's High Court, claiming the company was responsible for wrongdoing in its acquisition of a series of coal mines owned by Shanxi Jinye that had damaged their interests.

Ten assets of Shanxi Jinye were allegedly overvalued. In addition, China Resources Power was reported to have paid 4.1 billion yuan for non-performing assets. There were two mines at which the exploration licenses had expired when the deal was completed, according to shareholders.

A spokesman at China Resources said that the company's chairman Song Lin was dealing with the company's business operations as usual in Hong Kong. Song was appointed as chairman of China Resources in 2008.

Song is also chairman of the Hong Kong Chinese Enterprises Association and the Hong Kong Ethics Development Centre, as well as being a non-executive director of Geely and the Bank of East Asia.

Xinhua contributed to this story.

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