Investors sue China firm's directors over deal

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. CR Power and other subsidiaries of China Resources are quoted in the former British colony, which remains the biggest financial hub in greater China. The parent firm, 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. The allegations follow unrelenting anti-corruption rhetoric by China's leaders in recent months, with President Xi Jinping warning graft could "destroy the party" and threatening "no leniency" for those involved.Wang's Weibo account was suspended Wednesday after he posted his allegations, but was restored Thursday with the letter again visible. The directors "went against their obligations to the company of honesty and performing duties in a prudent and professional manner", Chen said at the briefing. China Resources defended its leaders in a statement late Wednesday, rejecting Wang's claims as "vicious slander". "The company... operates in strict compliance with national laws and regulations and all its business activities are done for the interests of the shareholders and the public," it said. "The company reserves the rights to hold legally responsible any statements and behaviours that amount to slander on the company's reputation and to pursue economic compensation." In an editorial China's state-run Global Times newspaper criticised Wang for causing a "sensation" by abusing his association with the country's biggest media organisation. "We need to consider whether real-name reporting by journalists through Weibo should become the norm," it said, describing it as "double-edged". "Cases where journalists are active on social media sites while the media outlets they work for remain silent should be avoided." China's social media have become an increasingly popular platform for anti-corruption activists. The sacking of Liu Tienan, former deputy director of the top economic planning agency, was announced in May, after a journalist at the influential business magazine Caijing late last year accused him online of improper business dealings.