Troubled China Essence unable to file Q2 results

Potato processor China Essence Group is unable to file its second-quarter results or hold its long-overdue annual general meeting as directors cannot reach the former management, the S-chip company said in a recent announcement.

Mr Zhao Libin, who was the executive chairman and chief executive, had resigned along with three directors in August when the company overhauled its board.

Shortly after Mr Zhao quit, it was discovered he had made unauthorised stock transfers to a Chinese local government authority.

According to a company announcement to the Singapore Exchange (SGX) on Sept 7, the share transfers stemmed from a protest by farmers who complained about money owed to them by two China Essence Group subsidiaries.

The directors said in an SGX statement in late October that they had made every attempt to contact Mr Zhao but had failed to reach him to get details of the transactions as well as the state of affairs of the company.

The situation was compounded by a spate of resignations - its auditors in July and its chief financial officer in September.

The firm is now without an auditor after the proposed replacement, Moore Stephens, withdrew its letter of engagement after it discovered the unauthorised transactions during a review as part of its client acceptance procedure.

Two executive directors appoin-ted in August have also left in quick succession in the past two months. They were responsible for the day-to-day running of the company, corporate development as well as mergers and acquisitions.

The Straits Times understands that Mr Er Kwong Wah, one of the two remaining directors, has visited four cities in China in attempts to locate Mr Zhao, but to no avail.

The firm said it will continue to try to contact Mr Zhao and the previous management, including by seeking assistance from the Chinese authorities. While the company purportedly has an office in Beijing, it is apparently no longer in operation. Its potato-processing facilities are in China's north-eastern province of Heilongjiang.

The shares of the mainboard-listed company, which is incorporated in the Cayman Islands, are suspended from trading. The firm has been on the SGX watch list since June last year. It posted a loss of 25.37 million yuan (S$5.7 million) for the three months ended June 30.

Chong Koh Ping

A version of this article appeared in the print edition of The Straits Times on November 25, 2015, with the headline 'Troubled China Essence unable to file Q2 results'. Print Edition | Subscribe