Brockman chairman in spotlight

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

By InvestSMART · 15 Oct 2011

By InvestSMART ·
15 Oct 2011

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THE steady flow of Chinese investment into Australia's mining sector is under renewed scrutiny, with Hong Kong corruption investigators targeting a director 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 standing yesterday by the chairman of both companies, Peter Luk, despite the revelation Mr Luk is under investigation by Hong Kong's Independent Commission Against Corruption.

While no charges have been laid against Mr Luk, Wah Nam confirmed 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 targeted by some Australian politicians this year over 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 the investigation into Mr Luk did not relate to affairs of the company, nor its subsidiaries, but concerned matters prior to Mr Luk becoming chairman.

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

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.

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Frequently Asked Questions about this Article…

What investigation is reported into Brockman Resources chairman Peter Luk?

Hong Kong's Independent Commission Against Corruption (ICAC) has initiated an investigation into Peter Luk. Wah Nam International confirmed the probe was "initiated against Mr Luk" in his personal capacity. The company and Brockman have not provided further detail on the nature of the inquiry.

Have any charges been laid against Peter Luk in the ICAC investigation?

No. According to the article, no charges have been laid against Peter Luk at the time of the report.

Does the ICAC investigation relate to the affairs of Wah Nam International or Brockman Resources?

Wah Nam has stressed the investigation does not relate to the affairs of Wah Nam, Brockman Resources, or their subsidiaries. The company says the matters under scrutiny concern events that occurred prior to Mr Luk becoming chairman.

Will the investigation affect Brockman Resources' Marillana iron ore project in the Pilbara?

Both Wah Nam and Brockman Resources stated the Marillana iron ore deposit — Brockman's prime asset in the Pilbara — would not be affected by the investigation.

How did Peter Luk become chairman of Brockman Resources?

Peter Luk became chairman of Perth-based Brockman when Wah Nam International completed a hostile takeover of the company earlier in the year.

How are Wah Nam International and Brockman responding to the probe into their chairman?

Both companies said they are standing by Peter Luk. Wah Nam confirmed the probe was personal to Mr Luk and a company spokesman said Mr Luk had no intention of standing down from his chairman roles.

Why is Chinese investment in Australia’s mining sector under renewed scrutiny?

The article says Chinese investment has come under renewed scrutiny amid growing foreign ownership of Australian resources and political attention. The debate has been fuelled by concerns over propriety, including a recent insider-trading investigation involving employees of Chinese investment group Hanlong.

What should everyday investors watch for next about the Brockman/Wah Nam situation?

Investors should monitor official updates from Hong Kong's ICAC, announcements from Wah Nam International and Brockman Resources, and any news about potential legal charges or corporate actions. The companies have so far maintained the Marillana project will not be affected and said Mr Luk will remain in his roles.