Revelations that the billionaire suitor for Sundance Resources has been detained by Chinese authorities has plunged the protracted takeover for the iron ore hopeful in grave doubt.
Liu Han, the founder of Sichuan Hanlong, had been in Beijing during the National Congress and was detained or under "police control" on Tuesday after the congress ended, according to the Shanghai Securities News. The report did not give a reason.
The development risks embarrassing the Foreign Investment Review Board, which waved the $1.3 billion deal through in June last year despite whispers about Mr Liu's colourful background and the concurrent court charges against his Australian executives for alleged insider trading. Hanlong's vice-president in Australia, Calvin Zhu has since been jailed, while another executive skipped town.
Sundance chairman George Jones said he was aware of the reports of Liu Han's detention, but that he hoped scheduled meetings with Hanlong and representatives of the National Development and Reform Commission would proceed as planned this week.
"Until we get an explanation, I'm a bit concerned," Mr Jones told Bloomberg. Chief executive Guilio Casello told Reuters he was not confident Hanlong would meet an interim deadline to submit a credit-approved term sheet to prove it had funding.
As Fairfax Media revealed in 2011, a former business associate ordered Mr Liu's assassination in 1997, but the assassin missed with the two shots he fired at a hotel in Sichuan. Their dispute had arisen because Mr Liu had been accused of conspiring with market regulators to strip the associate of 90 million yuan in a futures contract.
In 2008, the China Securities Regulatory Commission placed share trading bans in relation to Hanlong-related listed companies suspected of breaching trading laws. And more recently, a large dossier on the internet detailed claims about how Hanlong evaded 1.5 billion yuan in tax.
The Hanlong deal has become a highly frustrating affair for Sundance shareholders, dragging on for 20 months as Hanlong struggled to secure backing from its financier, the China Development Bank. And despite facing the ignominy of Hanlong reducing its bid halfway through negotiations, Sundance has persisted with the deal.
Shares in Sundance have been in a trading halt since Monday, last trading at 21¢ a share. Doubts over the deal have mounted, with speculation that Hanlong, if it was to remain interested, may seek to lower its offer of 45¢ a share.
Meanwhile, the combative former head of China's steel industry association, Shan Shanghua, has been arrested on corruption charges.