Date: November 13, 2009
SIAS is deeply disturbed by the current state of affairs at Sino-Environment Technology Group Limited (“Company”). We have carefully considered the statement made today by the Independent Directors of the Company – ‘Clarification Regarding Cessation Of Service Of The Company’s Subsidiary’ and there appears to be serious failure of corporate governance within the Company. The unilateral actions by the Executive Directors in not complying with the basic requirements of corporate governance by not seeking the approval of the Board and in choosing to act in breach of the service agreement relating to the Financial Controller, calls for immediate explanation from the Executive Directors. The Independent Directors have clearly refuted the allegation of misconduct or breach of duties on the part of the Financial Controller, as alleged by the Executive Directors in their annoucements. The position taken by the Independent Directors not only seriously questions the credibility of the Executive Directors but also their ability to continue in office.
The actions of the Executive Directors, if correct as alleged by the Independent Directors, are therefore, not clearly in the interest of the Company and consequently, the Shareholders. SIAS is informed that the Executive Directors do not hold shares in the company anymore and are therefore, not able to align their interests with the shareholders.
In the circumstances, SIAS calls on the three Executive Directors to step down immediately because, inter alia:
- As they do not hold shares in the company, they are deemed to have no interests in the Company anymore;
- They have been called upon to step down by the Independent Directors on several occasions, which demonstrates lack of confidence in their ability to continue as Executive Directors; and
- Their manner of sacking the Financial Controller without reasonable cause or prior approval of the Board, as alleged by the Independent Directors, also demonstrates clearly their lack of respect for Corporate Governance and the interest of the Company and it’s Shareholders.
Further, there are serious matters for concern for the shareholders of the company, besides the aforesaid matters:
- The Chairman, Mr Sun Jiangrong’s conduct in secretly pledging his shares without first informing the Board and/or the Shareholders as a matter of good corporate governance;
- The Chairman has been actively involved in litgation in Hong Kong;
- The Chairman has been described as having “a very low degree of commercial morality” by a High Court in Hong Kong, on 16 Oct 2009;
- PricewaterhouseCoopers (PWC) has been appointed by the Independent Directors, to investigate the affairs of the Company and certain transactions entered into by the Company whilst it was under the Management and supervision of the Executive Directors;
- The Company shares has been suspended from trading as a result of the interim findings of PWC
These facts do not bode well for the Company and raise serious questions over the manner in which the Company was managed by the three Executive Directors. The interest of the shareholders appears to have been seriously compromised.
Minority shareholders must now act to protect their interest. If the Executive Directors do not resign immediately as requested by Independent Directors, the shareholders should organise an EGM to remove the three Executive Directors to ensure that the Board of the Company is functional again and it is managed in the interest of all stakeholders. SIAS is prepared to co-ordinate with the shareholders to achieve this objective.
President & CEO