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Monday 25 January 2010
Be patient, SIAS tells Sino-Env shareholders
The Securities Investors Association of Singapore (SIAS) has urged shareholders of troubled firm Sino-Environment Technology Group to let the various authorities here and in China complete their investigations into the company.
Let probes here and in China take their natural course
By CONRAD TAN 10 December 2009
(SINGAPORE) The Securities Investors Association of Singapore (SIAS) has urged shareholders of troubled firm Sino-Environment Technology Group to let the various authorities here and in China complete their investigations into the company.
David Gerald, president of SIAS, which represents retail investors here, said that Sino-Environment’s two independent directors had filed reports with the police in mainland China, Hong Kong and Singapore, and that shareholders should now wait for the outcome of the probes.
He told reporters that he met officials from the Monetary Authority of Singapore (MAS) yesterday morning to express the concerns of small investors that had bought Sino-Environment shares.
‘MAS is fully aware and knows the concerns of the minority shareholders,’ he said. ‘But the position it takes is that, currently, there is a police investigation going on’ by both the Chinese authorities and the Commercial Affairs Department (CAD), the white-collar crime unit of the police here - and that these investigations should be allowed to take their ‘natural course’.
Trading in Sino-Environment shares has been suspended since Sept 23. On Oct 12, its independent directors told shareholders that special auditors from PricewaterhouseCoopers (PwC) had identified ‘questionable cash transactions and matters which may have a significant impact on the financial position of the company’. The PwC findings were forwarded to the authorities in Singapore, including the CAD, and in China, they said at the time.
Last Friday, the independent directors published a summary of the PwC report, which suggested that the company’s subsidiaries had made tens of millions of dollars in payments since May 11 without board approval or authorisation, despite explicit instructions then from the independent directors to the company’s executive directors that all payments above $500,000 had to be properly authorised.
On Tuesday, the independent directors filed an application in the Supreme Court, seeking a court order to convene a shareholders’ meeting to vote on the removal of the firm’s executive directors, including chairman Sun Jiangrong. That followed earlier, unsuccessful calls by the independent directors for the executives to resign from the firm and its subsidiaries.
Yesterday, Mr. Gerald said that it would be unfair to view S-chips, or Chinese companies listed in Singapore, as being especially vulnerable to problems arising from weak corporate governance. There are now 154 S-chips on the Singapore Exchange, of which just a few were ‘problematic’, he noted.
But ‘there has to be a fine balance’ between encouraging more companies to list here, and the need to protect investors here, he said.
One safeguard, he suggested, would be to require companies to maintain separate bank accounts for funds raised from investors here intended for overseas investments. That would allow the firm’s board to track the use of the funds more closely, ‘to ensure that the stated purpose is actually achieved’, he said.
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Be patient, SIAS tells Sino-Env shareholders
Let probes here and in China take their natural course
By CONRAD TAN
10 December 2009
(SINGAPORE) The Securities Investors Association of Singapore (SIAS) has urged shareholders of troubled firm Sino-Environment Technology Group to let the various authorities here and in China complete their investigations into the company.
David Gerald, president of SIAS, which represents retail investors here, said that Sino-Environment’s two independent directors had filed reports with the police in mainland China, Hong Kong and Singapore, and that shareholders should now wait for the outcome of the probes.
He told reporters that he met officials from the Monetary Authority of Singapore (MAS) yesterday morning to express the concerns of small investors that had bought Sino-Environment shares.
‘MAS is fully aware and knows the concerns of the minority shareholders,’ he said. ‘But the position it takes is that, currently, there is a police investigation going on’ by both the Chinese authorities and the Commercial Affairs Department (CAD), the white-collar crime unit of the police here - and that these investigations should be allowed to take their ‘natural course’.
Trading in Sino-Environment shares has been suspended since Sept 23. On Oct 12, its independent directors told shareholders that special auditors from PricewaterhouseCoopers (PwC) had identified ‘questionable cash transactions and matters which may have a significant impact on the financial position of the company’. The PwC findings were forwarded to the authorities in Singapore, including the CAD, and in China, they said at the time.
Last Friday, the independent directors published a summary of the PwC report, which suggested that the company’s subsidiaries had made tens of millions of dollars in payments since May 11 without board approval or authorisation, despite explicit instructions then from the independent directors to the company’s executive directors that all payments above $500,000 had to be properly authorised.
On Tuesday, the independent directors filed an application in the Supreme Court, seeking a court order to convene a shareholders’ meeting to vote on the removal of the firm’s executive directors, including chairman Sun Jiangrong. That followed earlier, unsuccessful calls by the independent directors for the executives to resign from the firm and its subsidiaries.
Yesterday, Mr. Gerald said that it would be unfair to view S-chips, or Chinese companies listed in Singapore, as being especially vulnerable to problems arising from weak corporate governance. There are now 154 S-chips on the Singapore Exchange, of which just a few were ‘problematic’, he noted.
But ‘there has to be a fine balance’ between encouraging more companies to list here, and the need to protect investors here, he said.
One safeguard, he suggested, would be to require companies to maintain separate bank accounts for funds raised from investors here intended for overseas investments. That would allow the firm’s board to track the use of the funds more closely, ‘to ensure that the stated purpose is actually achieved’, he said.
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