HONG KONG — CHINA Resources Holdings’ merger vote on Monday is uncertain after the government said it would conduct an audit following accusations the energy company deliberately overpaid in a 7.9-billion-yuan (R12.7bn) investment in coal mines in 2010.

The state-owned Assets Supervision and Administration Commission had started reviewing company accounts, the official Xinhua News Agency reported on Saturday. The commission would severely punish any misconduct, it was reported.

All five of the state-owned parent company’s units traded in Hong Kong have plunged since July 17, after allegations against China Resources and its chairman were published by Xinhua.

The group, which employs more than 400,000 people, said the claims were "malicious" and speculative, saying it paid a fair price for the assets in Shanxi province based on two independent assessments.

The controversy surrounding the purchase of the mines may help derail a plan for China Resources Power and China Resources Gas to merge. The plan, announced in May, would create a more integrated energy company. The merger has to receive approval from shareholders, who are due to vote on Monday.

The state audit comes as Xi Jinping, who became China’s president in March, pledged to investigate and clean up graft threatening to undermine the economy and the government’s grip on power.

London-based GlaxoSmithKline is being probed for possible corruption in the world’s most-populous nation, and Hong Kong-based Chow Tai Fook Jewellery Group, the world’s largest listed jewellery chain, has declined after China started a probe into possible collusion among companies over retail gold prices.

Glaxo said last month it had found no evidence of corruption or bribery at its China unit and Chow Tai Fook released a statement on Friday saying it sets its own prices.

The original allegations against China Resources were made in a letter on Xinhua’s website from one of its reporters to the Communist Party’s corruption inspector.

The letter said the power generator and its chairman paid about double what another company bid for the Shanxi assets. A group of minority investors have filed a lawsuit in Hong Kong with similar allegations. The investors’ representative, Li Su, founder of Hejun Vanguard, said last week it had no connection with the Xinhua reporter.

China Resources said in a statement filed with Hong Kong’s stock exchange that the best interests of shareholders have always been its top priority.

Bloomberg