Highlight High-profile exits the latest in penny stock saga

by **Cals** Fri 18 Apr 2014, 21:09

Highlight High-profile exits the latest in penny stock saga

Business & Markets 2014

Written by Cindy Yeap of theedgemalaysia.com

Friday, 18 April 2014 15:31

IN the latest twist to the so-called “pump and dump” Singapore penny stock fiasco, Asiasons Capital Ltd said half of its board members, including its chairman — former chairman of the Kuala Lumpur Stock Exchange Datuk Mohammed Azlan Hashim — will be vacating their positions by the end of this month.

Asiasons’ co-founder Azlan, joint managing director and co-founder Ng Teck Wah as well as independent director Lee Teck Leng — who specialises in criminal litigation and was formerly a deputy public prosecutor in the commercial affairs department (CAD) in Singapore before joining private practice — are not seeking re-election and will leave Asiasons’ board at the conclusion of its annual shareholders’ meeting on
April 28, according to the company’s AGM notice released on April 10.

News of the impending departures came one week after Singapore’s white-collar crime investigators raided the trading floor of stockbroking houses and offices of companies whose stock prices crashed last October, collectively wiping out some S$10 billion in market capitalisation.

Nonetheless, Asiasons managing director and co-founder Datuk Jared Lim tells The Edge that Azlan and Ng had decided to retire at the coming AGM “much earlier in the year”.

“Datuk Azlan has in the past few months taken on additional responsibilities in other companies he serves on. It was also decided that the chairman should be chosen from amongst the independent directors in pursuit of better corporate governance,” Lim says.

“The decision by Ng was also made earlier this year as the company undertakes a restructuring exercise to streamline existing operations and look into new businesses,” he says, adding that Ng will continue to serve as “a committee member in some subsidiary companies for continuity after his resignation [from the Asiasons board]”.

Lee, meanwhile, informed the board of his decision to retire “in the previous board meeting” citing “increasing work obligations”, Lim adds, without specifically mentioning whether media attention on the Singapore penny stock saga had any bearing on his decision.

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Last week, the Royal Bank of Canada joined a string of financial institutions, including Goldman Sachs Group Inc, Julius Baer Group Ltd, Bank of East Asia Ltd, Malayan Banking Bhd, AmInvestment Banking Group’s Singapore stockbroking unit AmFraser Securities Pte Ltd and Phillip Securities Pte Ltd, that have filed lawsuits over the October penny stock crash seeking to recover over S$245 million owed by former clients. The US-based Interactive Brokers LLC, the earliest to publicly declare there were shortfalls in its own credit practices and that clients owed it big bucks following the October crash, is also suing its former customers (see diagram).
In their joint investigation with the Monetary Authority of Singapore (MAS) into suspected trading irregularities in the shares of Asiasons, Blumont Group Ltd and LionGold Corp Ltd, officers from the Singapore Police Force’s CAD on April 2 confiscated documents and data storage devices and questioned individuals from Blumont and LionGold.

Investigators also approached Magnus Energy Ltd, Innopac Holdings Ltd, Ipco International Ltd and ISR Capital Ltd, which are among a broader group of Singapore-listed lower liners linked to the penny stock trio through a web of crossholdings, reported by The Edge (Issue 989, Nov 18, 2013).

As at April 3, Asiasons appears to be the only one of the three companies named in MAS’ April 2 statement whose directors and officers had not received notice to assist with investigations. According to Lim last Friday, “there has been no other developments since the April 3 announcement”.

In its statement dated April 10, Asiasons says it will appoint an independent chairman in place of Azlan, who “volunteered to retire as [non-executive non-independent chairman] of the company to preserve good governance practice”.

Of the remaining three Asiason directors, only Yin Kum Choy is up for re-election at the AGM. The other two staying on are Lim and independent director Attlee Hue Kuan Yew, filings show.

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Asked if Asiasons will name new directors ahead of its upcoming AGM, Lim says: “No, the new directors will not be named just yet.”
Meanwhile, he says it is business as usual at Asiasons. On March 27, the company said its agreement to take a 20% stake in Black Elk Energy Offshore Operations LLC for S$120.5 million had lapsed, but added that it “may continue to explore” whether there are other suitable cooperation opportunities with the same parties.

“Asiasons continues to explore new business opportunities that are value accretive, including those in the energy sector,” Lim says.
Over at Blumont, lawsuits taken out against executive chairman Neo Kim Hock — who is among persons asked to assist the CAD in its investigations — were among the reasons chairman-designate and mining executive Alexander Molyneux dropped plans to buy 135 million shares in the company. Had the deal gone through, Molyneux, who is chairman of Celcius Coal Ltd and has experience overseeing exploration companies, would have replaced Neo as Blumont’s chairman while the latter would have taken on the role of deputy chairman.

At the closing bell last Friday, Blumont shares were at their lowest since August 2012 while Asiasons shares plummeted to their lowest in over five years. Closing at 10.1 Singapore cents last Friday, LionGold, meanwhile, was one cent above its recent low of 9.1 cents on March 6 this year.

Collectively, their market capitalisation stood at S$237.94 million last Friday — just 2% of the S$11.23 billion the trio were worth at their respective peaks between Aug 29 and Oct 1 last year — down a whopping S$10.99 billion. The smallest of the trio now is Asiasons, whose market cap has shrivelled to S$43.1 million at its 4.4-cent close last Friday, a far cry from the S$979.8 million the company was valued at when its shares fetched S$2.91 apiece on Oct 1, 2013, before the share collapse.

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This article first appeared in The Edge Malaysia Weekly, on April 14, 2014.