Rich Capital's JV partner demands full control of Batam project, $20m compensation

SINGAPORE - Rich Capital Holdings has received two legal letters from an Indonesian law firm appointed by Karya Indo Batam (KIB) demanding for full control of a joint venture property development in Batam and compensation of $20 million.

KIB partnered with an indirect subsidiary of Rich Capital, Oxley Batam Pte Ltd, to form a 50:50 joint venture company, Oxley Karya Indo Batam (OKIB), to undertake the integrated Batam project, the Oxley Batam Convention City Project.

The letters allege conspiracy and breaches of the interested persons transaction mandate and Indonesian criminal laws with regards to the appointment of Rich Capital's associate company, Rich-Link Construction (RLC), as the main contractor of the Batam project.

The allegations also relate to a $2 million advance payment made by Rich Capital on behalf of OKIB to RLC.

KIB is demanding for full control of OKIB and $20 million in compensation.

The letters were addressed to Rich Capital, its controlling shareholder and non-independent, non-executive director Wang Zhenwen, and RLC.

Rich Capital said it has sought and obtained Indonesian legal advice that under Indonesian law, a subpoena is a formal summon issued by the court or other law enforcement authorities and that both letters are not subpoenas under Indonesian law.

Through its Indonesian lawyers, Hillman Sembiring Advocates, it has formally responded to the letters on Aug 16, 2019, rejecting and denying the allegations.

Rich Capital reiterated that it announced on Aug 14 that RLC has refunded the $2 million advance payment, and maintains there is no conspiracy or breaches of Indonesian criminal law.

The firm insists that KIB is not entitled to any restitution or compensation.

Separately on Friday, Rich Capital received queries from the Singapore Exchange regarding the letters and the status of the Batam project.

It said on Friday morning it is currently preparing responses to the queries.

The Catalist-listed firm's shares have been voluntarily suspended since June 27, following a trading halt called on June 24. Shares of the company last closed up 0.2 cent to 0.3 cent on June 21.