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Sunday 22 November 2009
Sino-Env slams sacked financial controller
The crisis at Sino-Environment has intensified with the management claiming that its sacked financial controller threatened the firm’s survival by diverting funds earmarked for bondholders to pay professional fees.
Firm’s China management claims he diverted funds meant for bondholders
By Goh Eng Yeow 20 November 2009
The crisis at Sino-Environment has intensified with the management claiming that its sacked financial controller threatened the firm’s survival by diverting funds earmarked for bondholders to pay professional fees.
The company maintains that the alleged actions of Mr. Raynauld Liang had jeopardised ‘the very existence of the company’ as it meant it defaulted on the bonds as it could not pay the interest.
The startling disclosure formed part of the rebuttal made by the company’s China-based management on Wednesday to a statement by independent directors Goh Chee Wee and Wong Chiang Yin. The two complained last week that they had not been consulted on Mr. Liang’s dismissal.
The rebuttal comes in the wake of a threat by the Singapore Exchange to delist the firm if it did not improve its corporate governance. Sino-Environment’s management said in the statement a sum ‘in excess of $5 million’ had been remitted from China to pay $2.98 million in interest that was due to the bondholders on July 8.
‘Despite explicit instructions given to him, Mr. Raynauld Liang wrongfully and improperly instructed the company’s staff to withhold payment of the said sum due to the bondholders,’ said the statement.
‘Mr. Liang, instead, used the funds to pay, amongst others, his claims for reimbursements and the professional fees charged to the company without the authorisation of the (chief executive) or acting CEO,’ it said.
The statement also disclosed two set of fees for professional advisers. One was a sum of $952,874 charged by PricewaterhouseCoopers (PwC) to carry out the special audit on the firm’s cash balances.
There was also a sum of $3 million paid to nTan Corporate Advisory to help the company negotiate with the bondholders.
Traders have been puzzled by the developments. ‘Keeping bondholders happy should have been top priority. The company’s board owe shareholders an explanation why money remitted from China was used to pay professional fees, and not bondholders,’ said one.
Sino-Environment spiralled into crisis on fears that bondholders might press for early redemption of a $149 million bond issued by the firm.
This followed the breach of a loan condition that the company’s founder Sun Jiangrong should stay in control. In March, his 56 per cent stake was seized by a hedge fund after he defaulted on a personal loan.
In the Wednesday statement, Sino-Environment’s management also said it had written to the independent directors objecting to PwC’s fee.
‘The independent directors never consulted us when they appointed PwC to carry out the special audit. To date, we have not been given access to, or provided with, any proposal submitted by PwC outlining their scope of work,’ it said.
Sino-Environment’s management also disclosed that it had not been given a copy of PwC’s interim report or any details concerning the questionable cash transactions.
‘This is despite the fact that nearly every other party - the independent directors and their solicitors, PwC, nTan and Mr. Raynauld Liang - appeared to have been given a copy,’ it added.
Apart from getting legal advice from the company’s lawyers, the independent directors had ‘sought and obtained separate legal advice for themselves in their personal capacities, at the expense of the company’.
‘We have informed them that they should do the right thing by not using company’s funds to pay their own legal fees,’ it added.
It also claimed that while it was aware that nTan was paid $3 million to advise in talks with the convertible bondholders, it had not been kept informed of the advisory firm’s work.
‘We have also not been given the opportunity by the independent directors to participate in any discussions with nTan or to provide any inputs,’ it added.
Sino-Environment shares have been suspended since September.
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Sino-Env slams sacked financial controller
Firm’s China management claims he diverted funds meant for bondholders
By Goh Eng Yeow
20 November 2009
The crisis at Sino-Environment has intensified with the management claiming that its sacked financial controller threatened the firm’s survival by diverting funds earmarked for bondholders to pay professional fees.
The company maintains that the alleged actions of Mr. Raynauld Liang had jeopardised ‘the very existence of the company’ as it meant it defaulted on the bonds as it could not pay the interest.
The startling disclosure formed part of the rebuttal made by the company’s China-based management on Wednesday to a statement by independent directors Goh Chee Wee and Wong Chiang Yin. The two complained last week that they had not been consulted on Mr. Liang’s dismissal.
The rebuttal comes in the wake of a threat by the Singapore Exchange to delist the firm if it did not improve its corporate governance. Sino-Environment’s management said in the statement a sum ‘in excess of $5 million’ had been remitted from China to pay $2.98 million in interest that was due to the bondholders on July 8.
‘Despite explicit instructions given to him, Mr. Raynauld Liang wrongfully and improperly instructed the company’s staff to withhold payment of the said sum due to the bondholders,’ said the statement.
‘Mr. Liang, instead, used the funds to pay, amongst others, his claims for reimbursements and the professional fees charged to the company without the authorisation of the (chief executive) or acting CEO,’ it said.
The statement also disclosed two set of fees for professional advisers. One was a sum of $952,874 charged by PricewaterhouseCoopers (PwC) to carry out the special audit on the firm’s cash balances.
There was also a sum of $3 million paid to nTan Corporate Advisory to help the company negotiate with the bondholders.
Traders have been puzzled by the developments. ‘Keeping bondholders happy should have been top priority. The company’s board owe shareholders an explanation why money remitted from China was used to pay professional fees, and not bondholders,’ said one.
Sino-Environment spiralled into crisis on fears that bondholders might press for early redemption of a $149 million bond issued by the firm.
This followed the breach of a loan condition that the company’s founder Sun Jiangrong should stay in control. In March, his 56 per cent stake was seized by a hedge fund after he defaulted on a personal loan.
In the Wednesday statement, Sino-Environment’s management also said it had written to the independent directors objecting to PwC’s fee.
‘The independent directors never consulted us when they appointed PwC to carry out the special audit. To date, we have not been given access to, or provided with, any proposal submitted by PwC outlining their scope of work,’ it said.
Sino-Environment’s management also disclosed that it had not been given a copy of PwC’s interim report or any details concerning the questionable cash transactions.
‘This is despite the fact that nearly every other party - the independent directors and their solicitors, PwC, nTan and Mr. Raynauld Liang - appeared to have been given a copy,’ it added.
Apart from getting legal advice from the company’s lawyers, the independent directors had ‘sought and obtained separate legal advice for themselves in their personal capacities, at the expense of the company’.
‘We have informed them that they should do the right thing by not using company’s funds to pay their own legal fees,’ it added.
It also claimed that while it was aware that nTan was paid $3 million to advise in talks with the convertible bondholders, it had not been kept informed of the advisory firm’s work.
‘We have also not been given the opportunity by the independent directors to participate in any discussions with nTan or to provide any inputs,’ it added.
Sino-Environment shares have been suspended since September.
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