KUALA LUMPUR (Nov 21): Sumatec Resources Bhd has lodged a police report against a former director for acting without board approval on several occasions and a possible breach of trust.

In a stock exchange filing today, Sumatec accused the director of signing a "parental company guarantee agreement" on May 2, 2016 to the Continental Industrial Supply and Services Limited Liability Company Partnership (CISS).

The agreement required Sumatec to pay approximately US$6 million in arbitration proceedings concerning payment of the CaspiOil Gas LLP contract.

“This is an act of misconduct which has resulted in a major loss to the company, because the alleged actions were without approval by the board,” Sumatec said.

The director had also witnessed the placement of the company’s seal on an agreement without the board’s resolution, resulting in Sumatec acknowledging it would undertake a settlement of around RM80 million of a collateralised loan obligation debt (CLO debt), although the liability had been waived.

“The director, in acting without board authority, was acting in conflict of interest in relation to the transactions involving the divestment of (former subsidiary) Semua International Sdn Bhd (SISB) and the CLO debt settlement,” Sumatec added.

Additionally, Sumatec believes the director was negligent in handling the financing of vessels under SISB and another subsidiary Semado Shipping Sdn Bhd.

This was because he had failed to ensure the takeover of the companies guarantees to Bank Pembangunan Malaysia Bhd and Malayan Banking Bhd to Hoe Leong Corp Ltd.

“The director also failed to procure the guarantee and to replace the company’s guarantee from the controllling shareholders of SISB, Hoe Leong Corp Bhd, as stipulated in the settlement agreement 2013 and the company’s circular to shareholders dated 30 May 2013.

“The negligence of the director in dealing with Malaysian Trustee Bhd has caused the company to be summoned and faced winding-up proceedings for liabilities estimated at about RM350 million,” Sumatec said.

The group announced its independent director and audit board chairman Datuk Khalid Ahmad had filed the report yesterday to the Commercial Crime Department on the advice and recommendation of the board of directors.

Sumatec's share price closed unchanged at 2.5 sen today, leaving the group’s market capitalisation at RM106.32 million.