BEIJING, July 18 – Pressure mounted on giant state owned conglomerate China Resources Thursday over a deal which a whistleblower said was tainted by huge corruption, as minority shareholders publicised a court case involving the firm.
Six shareholders of China Resources subsidiary CR Power are mounting legal action in Hong Kong against more than 20 of its current and former directors, among them group chairman Song Lin, over the acquisition.
Both CR Power and China Resources are quoted in the former British colony, which remains the biggest financial hub in greater China.
China Resources, a Fortune Global 500 company, had assets of more than $120 billion at the end of last year and operates in sectors including property, finance and electricity.
It reports directly to the central government in Beijing, making Song’s position equivalent to a vice minister, according to Chinese media reports.
“We believe Hong Kong’s legal system is just and we are confident in this case,” Chen Ruojian, a lawyer hired by the plaintiffs, told reporters in Beijing.
The briefing came a day after a journalist with China’s official Xinhua news agency alleged Song lost the firm billions of yuan (hundreds of millions of dollars) in the deal.
Wang Wenzhi posted on China’s Twitter like Sina Weibo that CR Power and an affiliate agreed to buy several mining and factory assets in 2010 from a private firm in Shanxi province for at least 7.9 billion yuan ($1.3 billion).
The final cost of the package was around 10.3 billion yuan, with some key price assessment reports provided by an agency hired by the seller, he added, but some of the mines’ licences had already expired.
A previous potential bidder had estimated the same assets to be worth just 5.2 billion yuan, said Wang, who made his accusations in the form of an open letter to the ruling Communist Party’s disciplinary department.