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Asia Ascent and its MD poised to sue senior SGX executive, alleging he ‘falsely and maliciously’ defamed them
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Asia Ascent and its MD poised to sue senior SGX executive, alleging he ‘falsely and maliciously’ defamed them
By LYNETTE KHOO AND MICHELLE QUAH
24 December 2011
A war of words that has hogged headlines in recent days has now escalated into a nascent legal battle.
Lawyers representing China Sky Chemical Fibre - which has publicly fought the Singapore Exchange’s (SGX) attempts to compel the Chinese company to appoint a special auditor - are poised to sue a senior SGX executive.
Asia Ascent Law Corporation, which represents the S-chip, wants SGX deputy chief regulatory officer Richard Teng to apologise for allegedly defaming the firm - going as far as suggesting possible legal action against Mr Teng if he does not do so.
SGX, for its part, stands ready to take legal action against China Sky.
Asia Ascent and its managing director Leonard Chia - who are, in turn, represented by Ang & Partners - have sent a letter to Mr Teng, accusing him of ‘falsely and maliciously’ defaming them.
And it is demanding an ‘apology sufficient to remedy Asia Ascent’s damage’ from Mr Teng by Dec 30 as an offer of amends under Section 7 of the Defamation Act. The section says that ‘if the offer is accepted by the party aggrieved and is duly performed, no proceedings for libel or slander shall be taken or continued by that party against the person making the offer in respect of the publication in question’.
Goh Kok Leong from Ang & Partners, which is representing Asia Ascent, told BT yesterday that Asia Ascent has not informed SGX of its intention to take action against SGX.
‘This is not to say that no action is being contemplated,’ he said. Mr Goh is described on the firm’s website as being a founding partner of Ang & Partners.
Ang & Partners’ letter to SGX says Asia Ascent and Mr Chia ‘have suffered and continue to suffer damage’ wrought by Mr Teng’s words. The comments were allegedly made by Mr Teng during his phone call with Mandarin-speaking Huang Zhong Xuan, China Sky’s chief executive officer.
The law firm claims that Mr Teng said it was not qualified to act as legal counsel for the company as it lacked the relevant expertise. It added that Mr Teng said it was negligent in failing to advise the company to immediately comply with SGX’s directive to appoint a special auditor.
It claims that his words were understood to mean that it is not authorised to practise law in Singapore, that the firm and Mr Chia do not possess the requisite qualifications to carry out their duties, and were negligent in their conduct of the matter.
‘We are taking the position that Asia Ascent is fully qualified and entitled to advise any SGX-listed company,’ Mr Goh told BT.
Asia Ascent is listed in the Singapore Law Gazette and described by insing.com as being a provider of ‘legal counsel and advice to its clientele of small and medium enterprises and large corporations’.
When asked by BT about these allegations, SGX called them ‘baseless’ and said it had its legal advisers standing by.
‘SGX considers it vital that its regulatory officers carry out their duties to the best of their ability without fear of prosecution or intimidation,’ said its spokesman. ‘SGX is concerned about the protection of the investing public. We will not be deterred from carrying out our responsibility by groundless threats of legal action.’
SGX maintained that ‘these actions do not affect SGX’s position that China Sky Chemical Fibre must comply with its directive to appoint a special auditor and do so without further delay’.
The Exchange had on Thursday refused China Sky’s request to lift the trading suspension of its shares, given the company’s failure to comply with its directive.
Trading of shares in China Sky has been suspended since Nov 17 at the request of the group, following SGX’s directive to immediately appoint a special auditor to probe certain transactions.
But China Sky resisted the directive and appointed Asia Ascent as its legal adviser. When publicly chided by SGX on Dec 16, China Sky defended its position and levelled accusations against SGX.
Two independent directors (IDs) have distanced themselves from China Sky’s responses to the public rap so far, saying that they have encouraged the board to work closely with SGX.
One of the IDs, Er Kwong Wah, said he had not seen or approved the drafts of announcements issued by the group on Wednesday and Thursday.
Legal practitioners and governance activists are watching this episode with much interest as this marks the first time a listed company here has defied an SGX directive to appoint special auditors.
Robson Lee, a corporate lawyer and deputy secretary of the Securities Investors Association (Singapore) (SIAS), noted that all listed companies in practice need to comply with SGX listing rules and directives.
‘I’ve been a practitioner for almost 17-18 years. I have not seen a situation whereby such a process is not carried out when the Exchange has made such a requirement.’
Market watchers noted that SGX has acted within its powers under its listing rules to query China Sky on certain transactions and direct a probe into areas of concern.
China Sky has, however, accused the Exchange of taking ‘an intimate interest in the corporate and strategic management and the day-to-day operations’ of the group.
Mak Yuen Teen, associate professor at NUS Business School and a well-known corporate governance advocate, noted that SGX does not have investigative powers and is ‘acting within its power’ in directing the company to appoint special auditors to probe certain transactions.
‘Obviously, SGX is not satisfied with the answers that were given by the company,’ Prof Mak said.
In the interest of transparency, China Sky should comply with the directive and make known the findings of the special audit, said SIAS’s Mr Lee.
‘What we need is a clear, objective third party coming in to look at all the issues and explain to the public what transpired in the transactions that were red-flagged by SGX,’ he added.