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Brockman boss in ICAC probe

THE steady flow of Chinese investment into Australia's mining sector is under renewed scrutiny, with Hong Kong corruption investigators targeting an executive with links to two ASX-listed stocks.

THE steady flow of Chinese investment into Australia's mining sector is under renewed scrutiny, with Hong Kong corruption investigators targeting an executive with links to two ASX-listed stocks.

Iron ore aspirant Brockman Resources and the local arm of Hong Kong investment group Wah Nam International were yesterday standing by the chairman of both, Peter Luk, despite revelations he was under investigation by Hong Kong's Independent Commission Against Corruption.

While no charges have been laid against Mr Luk, Wah Nam said the investigation was "initiated against Mr Luk" in his "personal capacity".

The revelations are the latest blow to the reputation of Chinese investors, who have been criticised by some Australian politicians this year for their growing ownership of local resources projects.

The foreign ownership debate has been stoked by a series of concerns over propriety, highlighted by a recent insider-trading investigation into employees of Australian-focused, Chinese investment group Hanlong.

Wah Nam stressed that the investigation into Mr Luk did not relate to affairs of the company nor its subsidiaries.

Mr Luk became chairman of Perth-based Brockman when Wah Nam completed a hostile takeover earlier this year.

He declined to clarify the nature of the investigation, but a spokesman for Wah Nam said he had no intention of standing down from the chairman's role at either company.

Brockman's prime asset is the Marillana iron ore deposit in the Pilbara, and both companies were adamant the project would not be affected by the investigation.

Wah Nam raised eyebrows last year when it launched an aggressive push into Australia's mining sector, given its existing business was focused on limousines and shuttle buses in Hong Kong.

Amid a hostile takeover battle earlier this year, Brockman executives attempted to convince shareholders to reject the takeover by highlighting Wah Nam's "minimal cash flow", lack of mining experience and some unusual trading patterns.

Brockman sought intervention from the Australian Securities and Investments Commission and the Takeovers Panel, but despite the panel confirming it was "concerned" by loans between certain shareholders for the purpose of buying Brockman shares, the takeover was completed without regulatory opposition in June.

Several Brockman executives left the company last month, and its shares are now worth just $1.89 well below the $6.04 the stock was fetching in April.


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