Sino boss wanted to move $7.5m offshore one day after float

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#1
Sino boss wanted to move $7.5m offshore one day after float
LEO SHANAHAN THE AUSTRALIAN MARCH 31, 2014 12:00AM

THE executive chairman of Chinese drilling services company Sino Australia Oil and Gas ­attempted to move $7.5 million of the company’s funds to bank accounts in China one day after the company listed on the ASX, the Federal Court has heard.

In documents filed in the proceedings, the Australian Securities & Investments Commission and the two former Australian directors outline complaints about the management of Sino Australia, including alleged breaches of directors’ duties after an attempted transfer of millions of dollars to a Chinese parent company for contracts that allegedly were not disclosed in the company’s prospectus.

According to a letter of complaint to the corporate regulator from two of the company’s sacked directors, Wayne Johnson and Andrew Faulkner, obtained by The Australian, Sino Australia’s executive chairman and majority shareholder Shao Tianpeng asked the board to authorise the payment of $7.5m into a Chinese bank account ­as soon as the company listed, which would have left $170,000 in its accounts.

“We write to you to raise what we consider to be matters of grave concern regarding the governance of the company,” they wrote on February 28.

Concerns have also been raised about alleged related-party transactions under­taken by Sino that former directors claim had not been disclosed to the board prior to the float.

Sino Australia Oil and Gas was the largest non-back-door listing of a Chinese company on the ASX last year when it floated on December 12, raising $12.8m at 50c a share, for a market capitalisation of $109m.

On March 14 ASIC successfully froze Sino’s HSBC account after Mr Johnson and Mr Faulkner refused to sign off on the Chinese bank account transfer.

Shares in Sino are now frozen, with concerns over the company’s failure to lodge its annual accounts last year.

“On 13 December, 2013, the day after the listing of the company, Mr Shao requested Mr Johnson to co-authorise the transfer of almost all of the company’s cash ($7,500,000) to an ICBC bank account apparently established in the People’s Republic of China. SAO has a ­wholly owned subsidiary in Hong Kong and that Hong Kong company in turn has a wholly owned subsidiary in PRC, named Zhaodong Huaying Oil Field Technology Service,” Mr Johnson and Mr Faulkner alleged.

“The board of SAO had not discussed nor authorised the opening of an SAO account in China. We were not aware such an account existed. In those circumstances and having regard to the fact that the transfer of funds as requested by Mr Shao would have left SAO with approximately only $170,000 in Aus­tral­ia, Mr Johnson declined to co-authorise the transfer of funds.”

Neither Mr Shao nor board members could be contacted for comment on the allegations, although it is understood Sino is attempting to comply with the requests of ASIC and the ASX.

Mr Shao and Sino have previously denied any wrongdoing.

Mr Johnson and Mr Faulkner were officially removed from the board last week, after several failed attempts by Mr Shao to remove them after they refused the transaction.

Sino’s board last week appointed several more directors.

“Mr Shao was most agitated we had not simply consented to the transfer of SAO funds to China. Matters became difficult at the board level. Among other things, Mr Shao wished us to resign as directors of ASO and for new directors of his choosing to be appointed,” Mr Johnson and Mr Falkner said in their letter.

The two former directors say they asked Mr Shao for details of the bank accounts, however “we have not received any information which satisfactorily confirms the details of the account”.

The letter concludes that “we consider that Mr Shao has breached his duties as a director and has acted, at best, in a misleading and deceptive manner”.

In an affidavit to the Federal Court in Victoria on March 13, ASIC senior manager Brendan Caridi says “there is a real risk of serious and irreparable harm to the interests of SAO’s shareholders if an interim injunction is not obtained that freezes the SAO’s HSBC account.”
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#2
I am not surprised at the Ah Tiong's behaviour. Makes me wonder why people still want to invest in S-chips, and hoping that their S-chips would be different from the rest who crashed and burned.

Kudos to the two Aussie directors who had the moral courage to oppose Shao's moves.

Feel sorry for the people who invested in Sino Australia's shares.
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#3
it is indeed a difficult situation/task they were facing.

2 queries i see - "account in china where the directors are not even aware"..usually in a board resolution meeting to approve the account opening..sometime it depends on who is the authorised signors and how many directors are there..is it normal to have a board with say 10 directors but maybe 2 of them are so called "sleeping" directors and not kept in the loop of this resolution already passed and signed by other directors or is it that all directors in a board has to be in the loop?

the news itself is not so consistent either - it said it has a subsi on hk which in turn own another subsi in china..but earlier sentence said the monies was to transfer to its parent co in china..confusing
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#4
(30-03-2014, 11:28 PM)pianist Wrote: it is indeed a difficult situation/task they were facing.

2 queries i see - "account in china where the directors are not even aware"..usually in a board resolution meeting to approve the account opening..sometime it depends on who is the authorised signors and how many directors are there..is it normal to have a board with say 10 directors but maybe 2 of them are so called "sleeping" directors and not kept in the loop of this resolution already passed and signed by other directors or is it that all directors in a board has to be in the loop?

the news itself is not so consistent either - it said it has a subsi on hk which in turn own another subsi in china..but earlier sentence said the monies was to transfer to its parent co in china..confusing

I made money from S-chips such as PFood, Celestial Nutrifood and Hongguo and Beauty China, but kena burnt by Ufood. I kinda got lucky that I exited my S-chips early, unlike many other unwitting investors.

Since then, no longer trust S-chips, even though PFood was a rare quality stock. Seen too many cases where S-chips directors resisted paying dividends or committing to a healthy dividend payout plan, in the name of wanting to reserve cash for business expansion.

What happened is that the directors usually end up pocketing the money in one way or another - 'invest' in land or assets owned by relatives or self through a holding company.

If S-ship boss says no dividends or low dividend payouts, I now assume he is up to no good until proven otherwise. In the meanwhile, I stay away from S-chips.
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#5
(30-03-2014, 09:31 PM)greengiraffe Wrote: According to a letter of complaint to the corporate regulator from two of the company’s sacked directors, Wayne Johnson and Andrew Faulkner, obtained by The Australian, Sino Australia’s executive chairman and majority shareholder Shao Tianpeng asked the board to authorise the payment of $7.5m into a Chinese bank account ­as soon as the company listed, which would have left $170,000 in its accounts.

......

“Mr Shao was most agitated we had not simply consented to the transfer of SAO funds to China. Matters became difficult at the board level. Among other things, Mr Shao wished us to resign as directors of ASO and for new directors of his choosing to be appointed,” Mr Johnson and Mr Falkner said in their letter.

Directors can be sacked or the article misquoted??

IMHO my observation is that Australia has the best corporate governance in Asia Pacific. Kudos to downunder which we usually assume to be "sleepy" Smile
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#6
maybe they are executive directors, so can be sacked?
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#7
Hanlong chief Liu Han faces life in jail
SCOTT MURDOCH THE AUSTRALIAN APRIL 01, 2014 12:00AM

Hanlong chief faces life in jail

Liu Han, who is on trial for murder and corruption. Source: Supplied
HIGH-profile Chinese business figure Liu Han, the founder of the Hanlong Group, is facing life in jail after his murder and corruption trial began in China yesterday.

Liu, who has major stakes in Australian companies, is one of 34 people facing trial in the Hubei province, in China’s central region, after they were charged for being part of a major organised crime ring.

It was alleged in court yesterday that Liu ordered the deaths of a number of his business rivals in the province.

Liu allegedly ordered the execution of his rivals, often in public places like tea houses, to reinforce his power and help Hanlong maintain its dominance as a mining company.

Hanlong remains the largest shareholder of ASX-listed miners Moly Group and Sundance Resources, after it launched an ambitious overseas expansion plan that focused on Australia and Africa.

A $1.3 billion bid for Sundance collapsed last year after the Chinese group could not ­secure finance.

Xinhua, China’s official news agency, said Liu tried to offset his alleged mafia rule by being one of Sichuan’s most generous ­philanthropists.

He famously built a new ­elementary rural school campus after an earthquake in 2008 devastated the province.

Liu Han’s brother Liu Wei faced court yesterday also charged with corruption and murder and being part of a “mafia-style” group.

A photograph of Liu Han in the court’s dock, flanked by ­policemen, was published on Chinese state and social media.

It has been speculated that Liu will spend the rest of his life in jail, given court sentences are usually negotiated in China ­before the trial starts.

The case has captivated China given Liu’s high profile and ranking as one of the richest men in the country.

Liu, who is reportedly worth at least 40bn yuan ($6.97bn), has had his assets seized as part of the police investigation. “His business empire was backed by menace,’’ Xinhua wrote last month.

It said that Mr Liu and his gang “have accumulated enormous wealth in property, mining, and electricity” via illegal means.

Sichuan is one of the powerbases of Zhou Yongkang, China’s former hugely powerful security chief, who is at the centre of rumours about a corruption investigation.

State media have hinted that Liu Han’s gang had political connections to central government officials.
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#8
quite interested to find out why his Chinese group secured funding last year? is his group on the sanctions by chinesebanks
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#9
May I ask if anyone here has ever checked if any of our scandalous S-chips has reputable cornerstone investors? Sorry if I appears lazy or piggybacking but for those who had crossed path with S-Chip, you might already have the answer at hand.

I am just trying to see if this is another indicator to separate good and bad S-chip. Or they also got fooled sometimes which means no one is really safe if they touches S-chips.
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