Singapore Exchange (SGX) has filed complaints with authorities in China against Wu Xinhua(吴新华), Executive Chairman and CEO of SGX-listed China Fibretech Ltd (中国纤科集团有限公司).
The complaint was made against Wu in relation to several alleged offences under the Chinese Penal Code.
The complaint was filed through lawyers appointed in both Singapore and China who have been advising SGX on the matter since 2016.
SGX has also concurrently referred the matter to the Singapore authorities.
China Fibretech, which is based in Shishi city in Fujian province, provides dyeing and post-processing treatment services for fabrics. The firm suspended the trading of its shares in Nov 2015 after three customers lodged damages claims against a subsidiary.
The three customers allege that “they have suffered substantial damages and financial losses” as a result of the subsidiary’s products “not meeting the specified requirements, resulting in de-colouring in their end-products”.
China Fibretech said the claims were for goods delivered in 2014 and early 2015. The alleged losses were not quantified in the claims.
China Fibretech executive chairman and chief executive Wu Xinhua said in a statement: “The management will be visiting the customers to establish the facts surrounding their allegations.”
Mr Wu said there is still “great uncertainty in relation to the validity of these claims, the quantum thereof and the impact that these might have on the company”.
He said management will not admit liability or agree to any compensation without board approval.
But in September 2016, and contrary to the instructions of the Board, payment was approved by Wu Xinhua, executive chairman & CEO, and the non-executive and non-independent director, Wu Dezhi (uncle to the Wu Xinhua) on their own. The duo claimed they did so to avoid further compensation and interest claimed by the Claimants. This was conducted without the knowledge of the senior finance manager or the only independent director based in Singapore.