In the late 1850s, resentment against Chinese gold miners gave rise to violent demonstrations on the goldfields of Victoria and NSW.

The Chinese worked in groups, they worked hard, and they were generally more organised and more frugal than the rest – just the sort of thing to infuriate a surly Aussie pan-handler.

Fomenting the racist sentiment were debates raging in state legislatures over restricting immigration. This boat people thing is as old as the tailings heaps.

By June 1861 tensions culminated in the infamous riots at Lambing Flat in NSW where the mob assaulted the Chinese miners and chopped off their pigtails.

Fast-forward 152 years and the debate still rages over restricting foreign control, and again latterly, Chinese control, over Australian resources.

The Chinese play a long game. Last week, Rio Tinto sold 80 per cent of its Northparkes copper and gold mine in the central west of NSW to China Molybdenum for $884 million.

Nearby, and 150 kilometres north-east of Lambing Flat, lies Newcrest Mining’s leviathan Cadia underground gold mine. It is the jewel in the Newcrest crown; 100 million ounces and at least 30 years of production. It would be unlikely if the Chinese, and indeed US juggernauts Newmont and Anglo, were not keeping a close eye on this one.

Particularly so, as Newcrest’s shares have been monstered by mismanagement and a tumbling gold price. When present chief executive Greg Robinson took over from Ian Smith in July 2011, Newcrest’s share price was bearing down on $40. Last week, they closed at $12.02, albeit having bounced nicely from nearly $9 thanks to a spate of bargain hunting and a falling $A.

The most dramatic slide came early last month when Newcrest conceded a massive $6 billion write-down, effectively demolishing all profits since 2000.

And muddying the waters further was the imbroglio over selective briefings. Before the earnings disaster was unveiled to the broader market, the likes of UBS, Citi and Credit Suisse issued sell recommendations on the stock and pulled back their profit forecasts.

Although Newcrest denied it had favoured particular analysts ahead of the market and selectively briefed them about the impending restructure, emails soon surfaced showing communications had been afoot between the company and certain stockbrokers.

Apart from the compelling circumstantial evidence – a tanking share price before the official announcement – it beggars belief that the sudden change in conviction by the brokers was mere coincidence.

Under pressure, Newcrest chairman Don Mercer declared there would be an independent investigation into the matter by former ASX chairman Maurice Newman.

The likely upshot of this review will be that Newcrest will change its tack, concede that some over-zealous employee had briefed the analysts, and offer up a scapegoat.

There will be much hand-wringing and sanctimonious tutt-tutting when this news arrives yet the reality is that selective briefing of leading analysts and institutional investors is common practice. It is just not usually this blatant, or ham-fisted.

More important, it obscures the bigger issue. Newcrest wildly overpaid for Lihir Gold. Though lauded at the time, and as the gold price fortuitously rose, as a masterstroke, Lihir has subsequently shaped as a $6 billion mistake.

Mind you, it was Smith who headed up the deal, backed by the current board. And it should be noted that Smith and other executives enjoyed substantial benefits as a result. Despite shareholders paying the price, Smith and others were paid bonuses for Lihir. Highlighting once again the nonsense of excessive executive pay, one-third of their Long Term Performance incentives were based on increasing Newcrest’s gold reserves.

Splashing shareholder funds on Lihir achieved just that; it increased gold reserves, hit the executive pay hurdles and put these LTIs plumb in-the-money. No matter the folly of the bull-market deal.

For the Newcrest board, the looming Newman report clouds the real issue. And while the regulators have been up in arms, sallying forth with a probe of their own, it is not official sanction the Newcrest board fears but class action lawyers. Litigation funder IMF Australia is looking at an action for breach of material disclosure.

This is just the thing to keep the drag in the stock price and even help serve up this enormous resource to a foreign predator on the cheap.

The Lihir disaster was also largely factored into the foundering Newcrest stock price. Until the rumoured selective briefings it had no 2014 production number ”in the market”. It was not the $6 billion blow-up so much as next year’s production figures that were the surprise. Until then, there was no guidance on 2014 production.