July 4 (Bloomberg) -- China Resources Power Holdings Co. should cancel its 2010 purchase of coal mines in Shanxi province, said Li Jianjun, a shareholder and activist who alleges that the assets were bought for the personal gain of the company’s former chairman now under investigation for graft.
Fu Yuning, chairman of the power unit’s state-owned parent China Resources Holdings Co., should review the deal and ask the seller to refund the money, Li told media in an improvised press conference outside the company’s headquarters in Hong Kong today. Security guards didn’t allow Li to enter the building and give a letter for the chairman.
“The problem was caused by former chairman Song Lin and we minority shareholders believe it’s the perfect time for the new chairman to clean house and solve the problem,” Li said.
China Resources Power has been buffeted by allegations related to its purchase of the three coal mines. Li said he submitted evidence to Hong Kong authorities last July claiming Song ordered the power unit to overpay for the assets for personal gains. The same month, a reporter from a newspaper controlled by the official Xinhua News Agency posted a letter online claiming the company and Song deliberately overpaid for the assets, prompting a government audit.
China Resources Power’s Hong Kong-based spokesman wasn’t available for comment.
In August, Song Lin rejected Li’s allegations as “false” and said he reserved the right to pursue libel action. A lawsuit filed by minority investors last year alleged the board failed to properly assess the mines and that buying them was detrimental to the company.
In April, Song was removed from his post and probed for “suspected disciplinary violations,” the Communist Party’s Central Commission for Discipline Inspection said. Disciplinary violations usually implies corruption cases. Fu took over as the chairman the same month.
Minority shareholders represented by Li control around HK$20 million ($2.6 million) worth of China Resources Power shares, he said, without disclosing how many shareholders have joined him. The company has a market value of HK$105 billion.
Shares of China Resources Power fell 2.4 percent to HK$21.95. The stock has gained 19 percent this year, compared with a 1 percent gain in the benchmark Hang Seng Index.
“We sincerely hope Chairman Fu understands the severity of the issue and takes swift action to address our concerns,” Li said.
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