PUBLIC CENSURE ANNOUNCEMENT
in respect of
Mr. Dhanin Chearavanont, Mr. Sumet Jiaravanon,
Mr. Min Tieanworn, Mr. Thirayut Phitya-Isarakul,
Mr. Thanakorn Seriburi and Mr. Veeravat Kanchanadul
(the "Executive Directors") and C.P. Pokphand Co. Ltd.
At a disciplinary hearing held on September 29, 1998 and subsequently at a disciplinary (review) hearing held on March 23, 1999, the Listing Committee of The Stock Exchange of Hong Kong concluded a disciplinary hearing into the conduct of C.P. Pokphand Co. Ltd (the "Company") and the directors of the Company in connection with certain connected transactions in relation to three wholly-owned subsidiaries of the Company, Tianjin Chia Tai Feed Tech Company Limited, Tianjin Chia Tai Agro-Industrial Co. Ltd and Chia Tai (China) Investment Co. Limited which advanced loans of approximately US$16,577,000 (equivalent to approximately HK$129,301,000) to a joint venture enterprise, Beijing Dafa Chia Tai Co. Ltd (the "JV") in the PRC. The JV is a 50/50 PRC joint venture in which the foreign joint venture partner is a company ultimately controlled by two Directors, Mr. Dhanin Chearavanont and Mr. Sumet Jiaravanon, and hence a "connected person" for the purposes of the Listing Rules. The amount of the loans advanced represents approximately 10.9% of the audited net tangible assets of the Company as at December 31, 1997. The Connected Persons, who are ultimately shareholders of the JV and Chia Tai Livestock Company Limited, together indirectly hold 1,094,662,834 shares of the Company representing 50.7% of the issued share capital of the Company. All the loans have been repaid with interest.
The Company and the Executive Directors have admitted breaches of the connected transaction rules under Chapter 14 of the Exchange Listing Rules.
The Listing Committee has concluded that the Company is in breach of Rule 14.26(6) of the Exchange Listing Rules. Further, the Listing Committee has found that by virtue of the said breaches of the Exchange Listing Rules, each of the Executive Directors has breached his Declaration and Undertaking with regard to Directors, whereby he undertook to comply to the best of his ability with the Exchange Listing Rules from time to time in force, and to use his best endeavours to procure that the Company of which he is a director would so comply and, in particular, to procure that the Company complies with Paragraph 2 of the Listing Agreement between the Company and the Exchange.
The Listing Committee of the Disciplinary (Review) Hearing is gravely concerned that although Mr. Sumet Jiaravanon and Mr. Phitya-Isarakul, both Executive Directors of the Company, knew of the breach as early as in the middle of April 1998 when they were informed of the position by the auditors, they took a positive decision to conceal the information concerning the financial position of the Company from their fellow directors; they did not inform their colleagues for the reasons set out in their submissions. The Listing Committee of the Disciplinary (Review) Hearing is extremely dissatisfied and critical with the conduct of Mr. Sumet Jiaravanon and Mr. Phitya-Isarakul. The Listing Committee of the Disciplinary (Review) Hearing is also seriously dissatisfied with the weak internal control system of the Company that led to the problem itself and its discovery by the auditors rather than management.
Accordingly, the Company is hereby publicly censured by the Listing Committee for the Company's breach of the connected transaction rules as provided for in Chapter 14 of the Exchange Listing Rules, in particular Rule 14.26(6) thereof.
Further, each of the Executive Directors of the Company, namely, Mr. Dhanin Chearavanont, Mr. Sumet Jiaravanon, Mr. Min Tieanworn, Mr. Thirayut Phitya-Isarakul, Mr. Thanakorn Seriburi and Mr. Veeravat Kanchanadul is hereby publicly censured by the Listing Committee for the following:
Corporate Communications Department