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30-03-2014, 09:31 PM
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.”
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.”
