SYDNEY, Australia

THREE executives at a Chinese mining firm stood down yesterday after Australia’s corporate watchdog said it was probing claims of insider dealing related to proposed investments in two local firms.

Steven Hui Xiao, the director of Hanlong Mining, and two other executives were cooperating with the investigation by the Australian Securities and Investments Commission (ASIC), the company said.

“They will stand down from their current positions in Hanlong and all other directorships of publicly-listed companies associated with Hanlong pending the outcome of the investigation,” Hanlong said in

a statement.

Hanlong vice-president Calvin Zhu and company employee Fan Zhang were also told to resign.

The move could revive fresh tensions between Canberra and Beijing over China’s interest in trying to purchase Australian resources companies.

ASIC said it had obtained court orders against the three “in connection with its investigation into suspected insider-trading activities in relation to Bannerman Resources Ltd and Sundance Resources.”

Hanlong made a A$1.2 billion (J$105 billion) bid in July to take over Sundance, an iron ore, copper and gold miner with projects in central Africa, which it already holds an 18.6 per cent stake in.

The Chinese firm also made a A$143.4 million play for Perth-based Bannerman, hoping to bag its Namibian uranium assets.

“The court found that ASIC had shown a solid basis for investigating whether Mr Xiao may have

contravened the Corporations Act insider trading provisions.”

Under the orders, issued by the New South Wales Supreme Court, Xiao’s assets were frozen and he was banned from leaving Australia until September 22, except for a visit to Hong

Kong for visa purposes on Tuesday

and Wednesday.

Similar travel bans and asset freezes were obtained for Zhu and Zhang.

Xiao’s wife, Xike Hu, another woman, FanFan Chen, and a company associated with Zhang, Wingatta Pty Ltd, also had their assets frozen, ASIC said.

Kang Huan Jun, the vice-president of Hanlong Mining’s parent company, Sichuan Hanlong, is en route to Sydney to oversee the transitional management of the business, the company said.

“It is important to note

Hanlong Mining is not under investigation,” it added.

Sundance requested a 24-hour halt in trading of its shares following the announcement, and issued a brief statement noting that “the investigation does not relate to the conduct of Sundance or its personnel”.

It last traded at 37.5

Australian cents.

“Sundance continues to progress its advanced negotiations with Hanlong Mining as well as with a number of other interested parties in regards to the development of the Mbalam iron ore project in the republics of Cameroon and Congo,” it said.

Bannerman’s shares continued trading and closed down 10 per

cent at 31.0 cents as it issued a statement to investors noting the ASIC investigation “into suspected insider

trading” by certain Hanlong executives in its shares.

“Bannerman advises that it continues to engage in discussions with Hanlong regarding the acquisition proposal made by Hanlong,” it said.

Beijing’s interest in Australia’s mining firms has sparked intense debate in the country over whether to allow Chinese state-owned

entities to increase their control over its resources.

Relations between Canberra and Beijing were also strained when Australian Rio Tinto executive Stern Hu was arrested in July 2009 and jailed last year for bribery and stealing

state secrets.

————————————– AFP