THE Communist Party of China's disciplinary department has confirmed the receipt of a letter from a journalist accusing the head of state-owned China Resources (Holdings) Co of corruption in a major acquisition in 2010.

In an open letter to the Party's Central Commission for Discipline Inspection on Wednesday, Xinhua news agency's Wang Wenzhi pointed a finger at Song Lin, chairman of China Resources, and other senior executives for suspected graft and dereliction of duty in approving a 7.9 billion yuan (US$1.3 billion) purchase of coal mines in north China's Shanxi Province, resulting in the loss of billions of yuan in state assets.

The assets were valued at half the price by an earlier bidder, Wang alleged. The disciplinary department is now looking into the matter, People's Daily reported yesterday.

China Resources, directly administered by the central government, denied the allegations on Wednesday night.

Its Hong Kong-listed unit, China Resources Power Holdings Co, which was involved in the purchase, also defended the acquisition after company shares tumbled as much as 11.8 percent on Wednesday following Wang's allegations.

In a filing to the Hong Kong stock exchange yesterday, CR Power said that it had hired two independent companies to value the assets in the purchase and insisted that the price it paid was "in fact lower than the total appraised values."

In response to allegations that it failed to file stock exchange statements about the acquisition, CR Power said it didn't have to because its equity in the acquisition was below the 50 percent threshold for filings.

"Compliance with the requirements of the listing rules and striving for the best interests of the shareholders have always been the top priority of the company," it said.

"The company reserves the right to take legal action against any party which intentionally releases false or unsubstantiated information which jeopardizes the reputation of the company."

Some minority shareholders of CR Power have earlier this month filed a lawsuit against incumbent and former directors of the company for "faulty" approval of the acquisition.