Australia seeks to prosecute ex-Hanlong executive after Hong Kong arrest

SYDNEY Tue Jan 14, 2014 1:51am EST

SYDNEY Jan 14 (Reuters) - Australia is seeking to prosecute a former executive of private Chinese firm Hanlong Mining Investment Pty Ltd on insider trading charges after he was arrested in Hong Kong, the country's corporate watchdog said on Tuesday.

The Australian Securities and Investments Commission said Hui Xiao, also known as Steven Xiao, was detained by Hong Kong authorities on Sunday, following a request by the Australian government, which now has 45 days to apply for extradition.

Xiao is wanted in Australia in relation to 104 offences linked to alleged insider trading ahead of Hanlong's takeover bids for Australia's Sundance Resources Ltd and Bannerman Resources Ltd in 2011, the commission said in a statement.

Xiao failed to return to Australia in 2011 after he was cleared to leave on a short visit to Hong Kong during the insider trading investigation.

Another former Hanlong executive, Bo Shi Zhu, also known as Calvin Zhu, was sentenced last year to two years and three months in jail on related charges. Zhu, an Australian citizen, had pleaded guilty to three counts of insider trading carried out between 2006 and 2011.

Zhu and Xiao, who stood down from their roles at Hanlong when the insider trading probe began in September 2011, were among several Hanlong executives whom ASIC investigated.

Hanlong remains Sundance Resources' biggest shareholder, though its proposed A$1.4 billion ($1.27 billion) takeover of Africa-focused Sundance was called off last April after Hanlong missed a series of funding deadlines.

Uranium miner Bannerman ended talks on a A$143 million offer from Hanlong in late 2011 on similar funding hurdles. ($1 = 1.1043 Australian dollars) (Reporting by Jane Wardell and Sonali Paul; Editing by Christopher Cushing)

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