Punishment vowed in case of China Resources corruption case

China's state-owned asset watchdog said Friday that punishments will be imposed if ongoing auditing uncovers any illegal practices at China Resources (Holdings), a Hong Kong-registered conglomerate that has been accused of corruption involving state-owned assets.

China Resources is currently being audited and the State-Owned Assets Supervision and Administration Commission (SASAC) will act according to the audit results, the commission said.

SASAC vowed to severely punish those responsible if any illegal practices or irregularities are found.

In a statement posted online 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 Daily, accused Song of intentionally overpaying for three coal mines and other assets that China Resources Power (CR Power), the Hong Kong-listed subsidiary of China Resources, bought in 2010 in north China's Shanxi Province.

A lawsuit filed this month by six minority shareholders of CR Power in Hong Kong also alleges that the company and its partner overpaid when it purchased the mines. The lawsuit also alleges that none of the mines had exploration licenses when CR Power made the acquisition.

The lawsuit names 20 former and existing CR Power board members, including Song Lin. A court hearing will take place in Hong Kong on August 5.

The company defended itself against the accusations in a statement provided to the Hong Kong Stock Exchange on Thursday, saying that while two of the three mines did not have licenses, the third received a 20-year mining license in April this year. Efforts to obtain the other two licenses are in progress, it said.

In the statement, CR Power also said the mines had been valued by two independent companies, adding that it paid less than the total appraised value of the mines.

Shares of several China Resources-affiliated Hong Kong-listed companies fell following the news, with CR Power plunging 4.53 percent to 16.86 Hong Kong dollars (2.17 U.S. dollars) per share on Friday after plummeting 10 percent on Wednesday.

CR Power's share price has tumbled 15.62 percent during the past three days, erasing 14.92 billion Hong Kong dollars from its market capitalization.