Monday 30 November 2009
Sino-Env independent directors fire back
The independent directors (IDs) of Sino-Environment Technology Group have vigorously refuted the claims made by the executive directors, saying that complaints against the company’s sacked financial controller and about the payment of certain professional fees are without merit.
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Sino-Env independent directors fire back
They say complaints against sacked FC and about payments are without merit
By LYNETTE KHOO
24 November 2009
The independent directors (IDs) of Sino-Environment Technology Group have vigorously refuted the claims made by the executive directors, saying that complaints against the company’s sacked financial controller and about the payment of certain professional fees are without merit.
The IDs - Goh Chee Wee and Wong Chiang Yin - also expressed shock over two large projects worth 189.64 million yuan (S$38.5 million) that the company had entered into earlier this year without the IDs’ knowledge, which, in their words, ‘further displays the executive directors’ abhorrent disregard for corporate governance’.
They hence reiterated their call for the executive directors (EDs) to resign immediately and also asked them to substantiate their claim that cash reserves of $14 million are held in a Xiamen bank, and to provide outstanding documents that were not submitted during the course of the audit.
This strong rebuttal from the IDs came soon after the EDs hurled allegations at sacked financial controller Raynauld Liang Wee Leong and at the IDs last week after the EDs’ summary dismissal of Mr. Liang drew flak from the IDs and subsequently the Singapore Exchange (SGX).
In particular, Mr. Liang was accused of causing the default on some $149 million of convertible bonds (CBs) by failing to pay interest and instead, using the money to pay off professional fees to PricewaterhouseCoopers (PwC) and independent financial adviser nTan Corporate Advisory as well as for his own reimbursements.
Yesterday, the IDs maintained that the EDs’ allegations of misconduct and breach of duties by Mr. Liang ‘are not only misleading but baseless’ and said that the summary dismissal of Mr. Liang ‘constitutes an abject failure to meet the standards of corporate governance’.
According to the IDs, they had requested $5 million to pay the CBs interest of $2.98 million, fees to PwC for the special audit and other professional fees and expenses. Some $3 million was set aside for the CBs interest payment, which has remained intact.
But other potential breaches of covenants under the bonds were identified before the interest payment date of July 8. Even if the interest on the bonds was paid, the CBs would still be in default of other conditions, the IDs said.
The executive directors were also kept apprised of the correspondence with the bondholders but they chose not to attend any meetings, they added. ‘Their refusal to respond on the terms (being negotiated) prevented any standstill agreement from being concluded.’
According to the IDs, the reimbursements for Mr. Liang’s expenses were provided for in his employment contract with the company while the 21 SGX filings that Mr. Liang was accused of releasing without the knowledge of the acting CEO were mainly administrative announcements.
They too were surprised that the EDs’ query on PwC’s review should crop up now.
The IDs pointed out that they had informed the EDs at a board meeting on Oct 24 that it would not be appropriate to disclose the findings in view of the ongoing investigations by the authorities.
‘Prior to the announcement on PwC’s findings which prompted the IDs to lodge reports with the appropriate authorities, the executive directors had never queried the conduct of the PwC review,’ the IDs said.
They also defended their obtaining separate legal advice with the costs borne by the company, as this was provided for under the company’s Articles of Association and terms of reference for audit committee.
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