Darco Water Tech's audit panel calls for deputy chairman to recuse himself from project

DARCO Water Technologies' audit committee has recommended that its deputy chairman consider abstaining from deliberations and decisions on a controversial Indonesian waste-management project that he has reportedly been pushing for Darco to invest in.

The mainboard-listed water treatment company, in response to queries from the Singapore Exchange (SGX), revealed on Friday that its audit committee has recommended that deputy chairman Robert Wang Zhi consider recusing himself from discussions and decisions on the Nambo project.

Darco added in the statement that the company is awaiting his response.

This revelation was made despite the board having said earlier that it saw no reason to view Mr Wang as having a potential conflict of interest.

The board was then responding to shareholders' questions ahead of Darco's annual general meeting. It had said then: "None of Mr Wang Zhi, his family and associates is interested in the project... Mr Wang Zhi is also not a director in the company which currently holds the project."

Minority shareholders who own a combined 15 per cent stake in Darco had earlier appealed for Mr Wang to recuse himself from talks and decisions on the project, since he is liable to fully reimburse Darco for any and all costs incurred in pursuing the acquisition if, for any reason, Darco cannot or decides against going ahead with it. This means he would face personal losses if Darco ditches the project.

These shareholders fear that the project - which Darco has said could require fresh funding of up to US$46 million - will be a major drag on Darco amid uncertain returns.  

Darco also said the company has reached out to Mr Wang on SGX's other queries.

SGX wanted to know how he became aware of a deal between Darco with Emsus Co to acquire 75 per cent of the total issued and paid-up share capital of PT Panghegar Energy Indonesia.  Panghegar Energy Indonesia's 80 per cent-owned subsidiary Jabar Bersih Lestari holds the controversial Nambo project. This gave Darco an effective 60 per cent interest in the project.

In addition, his response is pending on whether he had any involvement in the placement process that proposed S$6.5 million in new shares to be placed to three private investors at S$0.35 apiece.

Darco is to also furnish details of the background of how one of the investors, Yunnan Sidu Investment, was identified and procured as one of the placees for the proposed placement.

Shares of Darco were flat at S$0.16 when markets closed on Friday, before the company responded to SGX.