The head of a major state-owned company in China was yesterday accused of corruption by overpaying for an acquisition in 2010.

Song Lin, chairman of China Resources (Holdings) Co, and other senior executives are suspected of graft and dereliction of duty in approving the 7.9 billion yuan (US$1.3 billion) acquisition of assets including coal mines from a company in Shanxi Province, according to Wang Wenzhi, a reporter with the Economic Information Daily, a newspaper affiliated with the Xinhua news agency.

An earlier bid by another party valued the assets at half the price China Resources paid, Wang said. That resulted in the loss of billions of yuan in state assets.

Wang made the allegations on his Sina Weibo microblog in the form of an open letter to the Communist Party's disciplinary department. Wang's post was later deleted. Xinhua also carried a report on Wang's posting on its website, but then took it down.

Last night, China Resources denied the allegations, billing them as "speculation, assumptions and malicious slander."

In a statement, the company said all its operations have been conducted strictly according to law and in the interest of shareholders and the public.

It said that it welcomes anybody who still has doubts about the acquisition to provide evidence of corruption and fraud to the company's supervisor or to the company itself.

The Fortune Global 500 company operates in sectors from retail to property and power utilities. It's one of China's 100-plus enterprises directly administrated by the central government. As group chairman, Song is equivalent to a vice minister in rank.

A number of senior officials have been brought down following graft allegations that first emerged on the Internet.

In May, Liu Tienan, former vice director of the National Development and Reform Commission, was sacked following graft allegations by a journalist, also posted on Sina Weibo.

In the China Resources case, the licenses of some coal mines it bought had expired and production was suspended even before purchase, according to Wang. One of the mines was even being used by farmers to graze their sheep, he wrote.

Wang's allegations knocked down the share price of China Resources Power Holding Co, the listed unit of China Resources that acquired the Shanxi assets in 2010. China Resources Power, a power generator, tumbled as much as 11.8 percent in heavy trade volume, before closing 9.8 percent lower.

The Hong Kong-listed company said it was not aware of any reason for the share price slump.

In Hong Kong, six minority shareholders of CR Power had earlier this month filed a lawsuit against incumbent and former directors of the company for the "faulty" approval of the 2010 acquisition of coal mining assets.

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