You are here
Magnus Energy sheds light on CEO's disagreements with two directors who quit
MAGNUS Energy Group disclosed that two of its directors stepped down just half a year after winning a board tussle because they disagreed with the chief executive officer (CEO) on certain payments, office rental, staff costs, and the shutdown of a plant in Malaysia.
Anthony Kuek resigned as non-executive chairman and independent non-executive director on June 24. This was due to "irreconcilable differences" with executive director and CEO Charles Madhavan over, among other things, the entry of certain interested person transactions (IPTs) during the quarter ended March 31, as well as sustainability concerns relating to the company's finances, Magnus said on Wednesday.
Meanwhile, Ong Chin Yew quit on June 14 as a non-independent non-executive director. Likewise, his cessation was due to "differences of opinion" with Mr Madhavan.
In a bourse filing late Thursday night, the Catalist-listed firm said Mr Kuek disagreed on three payments: a service agreement between Blue Water Engineering Pte Ltd (BWEPL) and Magnus; a one-time S$30,000 lump sum payment of professional fees to former independent non-executive director Christopher O'Connor; and a monthly payment of fees, accommodation and office/administrative expenses to the director of Magnus's Malaysian subsidiary MEG Management.
Of the three, only the service agreement and the professional fees paid to Mr O'Connor are deemed IPTs under listing rules, Magnus said.
One of Mr Kuek's concerns was that the payments were not disclosed to him and Mr Ong, and were authorised by the CEO and Mr O'Connor, who was the audit committee chairman, without Mr Kuek's knowledge. On Thursday, Mr Madhavan said that Mr Kuek was in the company's office from January to February this year together with Mr Madhavan and Mr O'Connor, and had been privy to all conversations on the matters above and never voiced his objections.
As for the payment of professional fees, the company said Mr Kuek, Mr Madhavan and Mr O'Connor had verbally agreed to pay a certain amount to Mr O'Connor for work to be done since the takeover on Jan 9.
However, due to Singapore's "circuit-breaker" measures announced in April, Mr O'Connor was unable to continue his work, and the Ministry of Manpower rejected his application to take on a secondary directorship with the company. The then board thus decided it would not be possible for him to carry on as an independent non-executive director.
"Mr Madhavan felt that it is only fair to pay Mr O'Connor for additional work performed outside of his scope of work as independent non-executive director," Magnus said in the filing on Thursday.
Mr Ong, meanwhile, disagreed with the CEO on shared office rental and staff costs, as well as the shutting down of a microalgae plant.
Magnus said the two men had a difference of opinion about the expenses incurred by the company for the rental of shared office premises and the outsourcing of certain administrative functions to BWEPL.
Mr Madhavan is a director of and holds about half of the shares in BWEPL. Mr Ong thus felt that Mr Madhavan stood to gain from the fees paid to BWEPL under the service agreement.
As for the microalgae plant in Malaysia, held by Magnus subsidiary MEG, Mr Ong disagreed with how Mr Madhavan handled the facility's shutdown.
Mr Ong had "expressed his unhappiness" that Magnus was paying Anthony Reudavey, the director of Blue Water Engineering (M) Sdn Bhd (BWEM), to manage the plant's closure. Mr Reudavey has also been Mr Madhavan's business partner for two decades.
BWEM and BWEPL are separate entities and are not affiliated, Magnus noted.
Mr Kuek, Mr Ong, Mr Madhavan and Mr O'Connor were voted in as the new Magnus board just six months ago during an extraordinary general meeting requisitioned by minority shareholders including Mr Madhavan and Mr Ong. The meeting in January also saw the removal of Lee Chong Ping and Seet Chor Hoon as independent directors.
Mr Kuek has no shareholding interest in the company, and is also the independent non-executive chairman of Catalist-listed GSS Energy. Mr Ong owned a 7.28 per cent stake in Magnus as at June 15.
Magnus shares have been suspended from trading since August 2019.