Three Tanjung Offshore officials suspended

fd_29Jan2015_theedgemarkets

fd_29Jan2015_theedgemarkets

-A +A

KUALA LUMPUR: Three company officials in Tanjung Offshore Bhd have been suspended after an internal review by an independent committee established within the firm.

According to a filing with Bursa Malaysia yesterday, the company alleged that there were “possibilities of conflict of interest and breaches of fiduciary duty involving two of its directors, i.e. an executive director of Tanjung and a non-independent non-executive director of Tanjung, acting both individually and together”.

After deliberating on the findings by the independent committee to the board, Tanjung (fundamental score: 1.95; valuation score: 2.4) said it had decided to suspend the services of the said non-independent non-executive director, executive director and another individual, its group adviser, with immediate effect.

The independent committee was formed on Jan 8, 2015, with its members being three independent directors of Tanjung, namely George William Warren, Datuk Ab Wahab Ibrahim and Shahrizal Hisham Abdul Halim. It was formed to review and make recommendations “on matters arising from recent media reports on Tanjung”, according to the company’s earlier announcement to Bursa.

The independent committee said it found no faults or improprieties on several matters, namely the acquisition of a property in the United Kingdom for £6.7 million (RM36.7 million), as well as the acquisition of the remaining 49% of Gas Generators (M) Sdn Bhd.

However, it found “deficiencies in process” in the Philippine operations, which involved washing and trading of chromite tailings; and “lapses in control” in its ethylene prolylene diene monomer project in China.

Meanwhile, on its “construction work request (CWR) closure project”, Tanjung said the independent committee found that “there appears to be elements of collusion/ collaboration in the ongoing negotiations with a potential subcontractor which could result in serious inflation of costs for Tanjung”.

Tanjung said based on the committee’s finding, “Bourbon had informed that the two directors of Tanjung have approached Bourbon for a vessel contract in Malaysia during the period of heads of agreement for a personal company linked to the non-independent non-executive director of Tanjung”.

To recap, Tanjung had a deal with Bourbon Offshore Asia Pacific Ltd to inject the latter’s marine assets into the former, which would eventually result in a reverse takeover of Tanjung by Bourbon. However, the deal was mutually terminated in December 2014, following changes in the prevailing economic, financial and market conditions, including declining oil prices.

Tanjung said the actions above could have resulted in a “loss of business opportunity and potential income stream related to the Bourbon deal; the negotiation of disadvantageous and lopsided contract terms and potential future loss related to the CWR project; and the dissemination of confidential company information to third parties related to both the Bourbon transaction and the CWR project”.

Interestingly, Tanjung didn’t name the trio whom it suspended in the late evening announcement to Bursa.

However, in a statement released prior to its Bursa filing, it identified the three individuals as executive director Muhammad Sabri Ab Ghani, non-independent director Tan Sri Tan Kean Soon and adviser Datuk Harzani Azmi.

The statement was issued by Millennium Associates Sdn Bhd on behalf of Tanjung.

As the largest shareholder, Lembaga Tabung Haji owns a 8.26% stake in Tanjung. Its last transaction of an acquisition of 1.45 million shares was done in December last year. This is followed by Tan, who holds a 5.79% equity interest in Tanjung.

Tanjung ended 5% higher at 42 sen yesterday, translating into a market capitalisation of RM156.26 million.

 

This article first appeared in The Edge Financial Daily, on January 29, 2015.