China Sky Chemical Fibre

[wsreader]

The latest company announcement seems to suggest there is a role reversal, ie China Sky is the one persuading the Exchange to be more transparent. Wow... this saga really broke new ground.

[Musicwhiz]

The Straits Times
Mar 10, 2012
CAD arrests former director of China Sky
Accountant provided services for company through his firm while he chaired audit panel

By Melissa Tan

A FORMER independent director of China Sky Chemical Fibre has been arrested by the white-collar crime unit and his passport has been impounded.

The Straits Times understands that accountant Lai Seng Kwoon was arrested this week at the Commercial Affairs Department's (CAD) offices and is out on bail.

This is the latest development in a saga that started after China Sky refused to submit to a special audit requested by the Singapore Exchange (SGX).

If the CAD does not charge someone within 48 hours of an arrest, the person must be released unconditionally.

When asked whether Mr Lai had been arrested or charged, a police spokesman said it was inappropriate to comment, citing ongoing investigations.

It emerged last April that Mr Lai had provided significant accounting-related services for China Sky through his firm SK Lai & Co from 2008 to 2010, while he was an independent director and chair of the audit committee. These services were related to reviewing the company's internal, accounting and reporting controls; quarterly financial statements and result announcements, as well as providing consultancy and advisory services for accounting procedures.

The payments were recurring interested person transactions (IPTs) and they amounted to about $112,000 in 2008, $183,000 in 2009 and $72,000 in 2010.

An interested person is someone with a business interest in a firm.

Mr Lai's involvement came to light after the SGX asked China Sky for the identity of the party with whom the company had undertaken the transactions.

His business relationship with China Sky had raised questions about possible conflicts of interest and the degree of his independence, given that he was the chairman of the audit committee.

These IPTs between Mr Lai's firm and China Sky were one of the issues that prompted the SGX to direct a special audit into China Sky's financial dealings last November.

The SGX also wanted to look into the nature of the transactions relating to repairs and maintenance costs, and the circumstances surrounding the purchase and subsequent return of land in China's Fujian province.

The fate of China Sky's two other former independent directors, Mr Er Kwong Wah and Mr Yeap Wai Kong, remains unclear.

It is believed that all three have been questioned by the CAD in relation to its probe into the firm regarding potential breaches of the Securities and Futures Act (SFA).

Mr Er could not be reached for comment yesterday.

Mr Yeap said by telephone yesterday that he had left Singapore earlier this month and would remain in China until later in the month.

Unlike Mr Er, Mr Yeap was not an independent director at the time of the IPTs between Mr Lai's firm and China Sky.

Mr Yeap is seeking to overturn a public reprimand issued to him by the SGX when he was still an independent director. The court hearing is scheduled for March 26.

The CAD investigation was announced by the Monetary Authority of Singapore and the police on Feb 16.

Lawyers have noted that one area the CAD could be looking at is Section 203 of the SFA, which makes it an offence for listed companies to intentionally or recklessly fail to disclose to the SGX any information required under listing rules.

Offenders under this section can be fined up to $250,000 or jailed for up to seven years, or both.

melissat@sph.com.sg

[dydx]

For a professional ID with a good conscience and of good reputation, it does not pay at all to be involved as an ID with companies of less than satisfactory quality in character and the background of the people in-charge - worst still, with those dubious ones! Forget about the director's fee, even $50k a year is a decent sum. To get hauled in by CAD and charged in court, whatever good reputation built over the years is gone and destroyed!

[weijian]

Since SGX has no judiciary powers over foreign registered companies like ChinaSky, it seems like they are taking the other approach of going after IDs that are locally domiciled. In the long run, this will force people to think twice about taking up ID positions in companies that are dubious ,as there is NO (almost) free lunch anymore. Will this better help the Market to seperate the better foreign registered companies from the bad?

[brattzz]

oh yes, can't catch the china owners, catch the local IDs... lolz!

its a GREATX idea to use BAD IDs as flagg out tags!!

[brattzz]

Cut & Paste from Channelnewsasia forum....

China Sky Fiber CEO run road with $10 million
（新加坡讯）联合早报记者王阳发报道，天宇集团（China Sky Chemical Fibre）前首席执行员兼执行董事黄忠炫在今年3月5日已从他的瑞士信贷银行（Credit Suisse）新加坡分行户头提走约1000万美元（1260万新元）资金，并在3月27日进一步指示银行 ，要提走其余的350万美元资金。金融管理局（MAS）已申请庭令，要冻结黄忠炫在该户头的其余资金，因为 天宇集团和其董事（以及前董事们）正遭商业事务局（CAD）调查，如果罪成可能被罚款。

　　金管局官员在法庭文件中指出，关键是必须有资产来履行支付罚款的义务。黄忠炫在瑞士信贷银行户头的资金 ，被黄忠炫提走或花掉的“风险很大”。黄忠炫目前并不在新加坡。法庭将在4月11日闭门聆讯。

　　新加坡交易所（SGX）发现天宇集团账目的一些可疑之处以及关联交易后，要求天宇集团委任特别审计师进 行调查。但黄忠炫和天宇集团竟执意不从并激烈对抗和抨击新交所。黄忠炫是在与新加坡交易所（SGX）激烈对 峙闹僵白热化、三位独立董事集团辞职后，于2月8日以“个人健康”理由辞去集团首席执行员兼执行董事职务。 商业事务局在接到新交所和金管局报案后，于2月16日对天宇集团和有关董事（及前董事）展开调 查。

　　（详情见明日《联合早报》）

http://realtime.zaobao.com.sg/2012/04/js..._048.shtml

[Musicwhiz]

The Straits Times
Apr 10, 2012
Bid to freeze account of China Sky ex-chief
MAS seeks court order to stop any withdrawals from Singapore account

THE Monetary Authority of Singapore (MAS) is seeking a court order to freeze the funds of Mr Huang Zhong Xuan, the former chief executive officer of China Sky Chemical Fibre Co, which is being probed for regulatory breaches.

The financial watchdog wants to stop Mr Huang, a Chinese national, taking or sending money out of his Credit Suisse Group account in Singapore.

China Sky and its directors may be fined as a result of the probe, according to papers filed in the High Court on March 28.

'It is imperative that assets should be available to satisfy such liabilities,' Mr Lee King See, deputy director of enforcement at the MAS, said in court papers. 'There is a grave risk that the monies in the bank account are being dissipated by' Mr Huang, who is not in Singapore.

A closed hearing is scheduled for tomorrow.

The regulator's move is the latest in a series of disputes the Chinese nylon-fibre maker and its directors have had with the authorities.

China Sky and its board are being investigated by the white-collar crime agency for potential breaches of securities laws, after 'a number of irregularities' were uncovered by the Singapore Exchange, according to court papers.

Mr Huang, who quit as CEO on Feb 8 for what he called personal health reasons, did not reply to two e-mail messages seeking comment.

Three calls to China Sky's number in Fujian were unanswered.

Mr Huang transferred about US$10 million (S$12.6 million) out of the bank account on March 5, and on March 27 gave instructions to move the remaining US$3.7 million, according to court papers.

Credit Suisse provided copies of Huang's account opening forms and banking details from Dec 6, 2010 to March 27 to the Commercial Affairs Department (CAD), which asked for the details on March 26, according to the MAS's court filing.

The CAD, which began the probe on Feb 16, is examining possible offences including making false and misleading statements as well as failing to disclose material information, according to the filing.

Such offences may be punishable with a criminal fine of as much as $250,000 and a jail term of as long as seven years, or a fine of as much as $2 million as a civil penalty.

Mr Huang is also being sued by a unit of Malaysia's Hong Leong Bank for failing to pay $7.4 million on a share margin facility, according to the lender's court papers. He had pledged part of his stake in China Sky to the bank, according to the complaint.

Mr Huang, the largest shareholder in China Sky through his company Rock Mart Equities, has a 37.8 per cent stake, according to data compiled by Bloomberg.

The Singapore Exchange sued China Sky in a separate lawsuit on Jan 6, to compel it to appoint a special auditor to look into transactions between the firm and its audit committee chairman Lai Seng Kwoon, as well as an aborted land acquisition in China.

The case was dropped on Jan 16, without a reason provided.

China Sky has disputed that it breached any listing rules or infringed securities law, the MAS said in its papers.

The Quanzhou City, Fujian-based firm ignored the bourse's directive to appoint a special auditor and said some demands made by the exchange 'were extremely unreasonable'. It likened China Sky's position to that of a 'bullied child'.

Separately, former independent director Yeap Wai Kong is seeking permission to overturn the Singapore Exchange's public rebuke on Dec 16.

All three independent directors - Yeap, Lai and Er Kwong Wah - quit on Jan 5, citing non-compliance with the bourse's order to name the auditor.

Group financial controller Hui San Wing resigned on Feb 8, citing a lack of leadership, guidance and support from the CEO and independent directors.

BLOOMBERG

[Temperament]

Why allow to be listed in the main board in the first place? Is the 2nd Board for less stringent IPO business identities still exists? I may have given a cursory look at 2nd board but i never want to invest because i feel it's really for the specialists/insiders investors only. SGX has in a way declares 2nd board is for some suitable investors only. Is 2nd board still around? Or have some of us being given a disney-land's roller coaster ride?

[greengiraffe]

Men in the open trying to catch men who gotten away into the dark... you cannot catch me...

China Sky's ex-CEO may face contempt of court charges

Published on Jul 10, 2013

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Mr Huang, who also missed an April court date last year, had not informed the court that he would not appear. -- PHOTO: CHINA SKY CHEMICAL FIBRE ANNUAL REPORT

By Rachel Scully

THE former chief executive of China Sky Chemical Fibre could face contempt of court charges after he failed to show up at a hearing yesterday concerning funds frozen in a bank account.

Mr Huang Zhong Xuan, who also missed an April court date last year, had not informed the court that he would not appear.

His legal representatives told High Court Justice Belinda Ang yesterday that Mr Huang had been advised not to travel from China after undergoing a medical examination.

Another defence witness, Mr Sunny Hui, who was formerly China Sky's group financial controller, failed to turn up as well.

Lawyer Philip Fong, of Harry Elias Partnership, said Mr Hui said he was "not a party to the proceedings and had more important matters to attend to".

Senior Counsel Cavinder Bull of Drew & Napier, who is the lead lawyer of the plaintiff, the Monetary Authority of Singapore (MAS), said their absence showed "disobedience of a court order" and may amount to a criminal offence.

The hearing centres on US$3.7 million (S$4.7 million) that has been frozen in a Credit Suisse bank account since March 28 last year. The MAS won an initial interim order to freeze the cash and wants a High Court extension.

Ownership of the funds is a key aspect of the dispute.

They are in an account in the name of Build Up International Investments, a firm registered in the British Virgin Islands. Build Up is the second defendant in the dispute alongside Mr Huang.

Build Up and Mr Huang both claim that the bank account does not belong to Mr Huang. They also assert that Mr Huang does not own Build Up so the funds should not be frozen. Mr Huang has said that the dispute was between the MAS and Build Up, which has only two registered shareholders - Mr Lau Kam Sze and Mr Huang's daughter Yiling.

The case had been adjourned last April as Mr Huang was absent and not represented due to delays in serving him court papers in China.

China Sky and its directors have been under investigation by the Commercial Affairs Department (CAD) since February last year for possible breaches of the Securities and Futures Act.

Mr Huang was CEO when the offences may have occurred.

The MAS said the funds in the account could be used to meet any liabilities if the ongoing CAD probe shows that offences had been committed.

A month after Mr Huang's sudden resignation as CEO, he transferred about US$10 million out of the account, on March 5 last year. On March 27, he instructed Credit Suisse to move the remaining US$3.7 million.

Mr Huang's lawyers told the court yesterday that Ms Lillian Liao, a relationship manager with Credit Suisse for the Build Up account, had lied in her affidavits about how the bank account came to be set up and about her preparation of the documents which purportedly show that Mr Huang is its beneficial owner. They also said the funds belonged to Mr Lau.

Senior Counsel Goh Phai Cheng, who is representing Build Up's Mr Lau and Ms Huang, said a key document - the declaration of beneficial ownership - stating that his clients held shares in Build Up as Mr Huang's nominees had not been signed by them. Mr Goh alleged that his clients' signatures were forged.

Ms Liao told the court that no forgery had taken place and that she had personally witnessed Mr Huang signing the document, which contains the signatures of all three persons.

The case is scheduled to run until Friday.

rjscully@sph.com.sg

Background story

China Sky and its directors have been under investigation by the Commercial Affairs Department since February last year for possible breaches of the Securities and Futures Act.

[cfa]

Now he is taunting at the laws of Singapore , Why is he so daring ?