China Sky's latest woes: Unpaid wages and benefits

 A sign of China Construction Bank is seen at a branch in Beijing, China, on April 21.
A sign of China Construction Bank is seen at a branch in Beijing, China, on April 21. PHOTO: REUTERS

Dark clouds are hovering over China Sky Chemical Fibre once again.

The mainboard-listed nylon and textile producer sought a suspension of its shares last week.

This came after it said in a statement last Friday it learnt China Construction Bank had filed at least five lawsuits against two of its units in Quanzhou, Fujian province.

It provided further details yesterday, disclosing that it had received a court order for one of its units to compensate about 800,000 yuan (S$162,000) to 34 staff who had been laid off.

The company said it received confirmation that wages of about 3.6 million yuan and social security contributions of 8.1 million yuan remain outstanding, but added that "no lawsuits have been filed in this regard".

All this follows the firm's resumption of trading last September, after a four-year trading suspension.

Its time in the wilderness began in late 2011, after the Singapore Exchange (SGX) told the firm to appoint a special auditor to look into its transactions. Its disgraced former chief executive admitted to making misleading statements on the firm's planned land acquisition in Fujian.

In the first negotiated deal of its kind, he paid a civil penalty of $2.5 million under a settlement agreement with the Monetary Authority of Singapore in February last year.

Veteran investor Mano Sabnani, who had held onto the company's shares, said that he had gone for the shareholders' meeting in June, and had been assured that the company's cash was in good hands.

"When it was relisted, everyone thought it had passed its great hurdle."

In a statement yesterday, SGX said it was watching developments closely and ready to take action.

"Enforcement powers under the listing rules were enhanced in October 2015. If warranted, SGX may impose composition sums depending on severity of rule breaches."

It added that rule breaches can be referred to the Listings Disciplinary Committee and Listings Appeals Committee which are empowered to mete out punitive actions, including public reprimands and fines.

A version of this article appeared in the print edition of The Straits Times on August 16, 2016, with the headline 'China Sky's latest woes: Unpaid wages and benefits'. Print Edition | Subscribe