China's Puda Coal confirmed allegations that its Chairman, Mr Ming Zhao, transferred ownership of its majority owned Chinese unit to himself in September 2009 without seeking a formal shareholders' approval.

On April 8 2011, an online article had alleged that Mr Ming Zhao engaged in a number of undisclosed transactions involving the ownership of Shanxi Puda Coal Group Co Ltd, the company's operating subsidiary in China.

He arranged for the transfer of 90% of Shanxi Coal shares to himself in September 2009, according to a company filing.

Puda Coal said the probe found that Chief Executive Mr Liping Zhu was aware of the transactions, which were authorised by Mr Yao Zhao, the chairman's brother, also the legal representative of Shanxi Putai Resources Limited, another unit of Puda Coal.

The audit committee further found that Mr Ming Zhao had signed various documents to further transfer 49% of the ownership of Shanxi Coal to CITIC in or around July 2010.

The company said Mr Ming Zhao and another company employee Wei Zhang signed deals pledging their 51% stake in Shanxi coal to CITIC in July 2010.

On July 12, Puda's auditor, Mr Moore Stephens, had resigned and warned that audit reports for fiscal years 2009 and 2010 should no longer be relied upon in relation to the alleged illegal transactions.

(Sourced from Reuters)