Rich Capital gets legal demand from partner over Batam project

Singapore

RICH Capital Holdings has received two legal letters from an Indonesian law firm appointed by Karya Indo Batam (KIB) demanding full control of a joint venture property development in Batam and compensation of S$20 million.

KIB had partnered with an indirect subsidiary of Rich Capital, Oxley Batam Pte Ltd, to form an equal joint venture company, Oxley Karya Indo Batam (OKIB), to undertake the integrated Batam project, the Oxley Batam Convention City Project.

The letters alleged conspiracy and breaches of the interested persons transaction mandate and Indonesian criminal laws with regards to the appointment of Rich Capital's associate company, Rich-Link Construction (RLC), as the main contractor of the Batam project. The allegations also relate to a S$2 million advance payment made by Rich Capital on behalf of OKIB to RLC. KIB is demanding full control of OKIB and S$20 million in compensation.

The letters were addressed to Rich Capital, its controlling shareholder and non-independent, non-executive director Wang Zhenwen, and RLC.

Rich Capital said it had sought and obtained Indonesian legal advice that under Indonesian law, a subpoena is a formal summon issued by the court or other law enforcement authorities and that both letters are not subpoenas under Indonesian law.

Through its Indonesian lawyers, Hillman Sembiring Advocates, it has formally responded to the letters on Aug 16, rejecting and denying the allegations.

Rich Capital reiterated that it announced on Aug 14 that RLC has refunded the S$2 million advance payment, and maintains there is no conspiracy or breaches of Indonesian criminal law. The firm insists that KIB is not entitled to any restitution or compensation.

Separately, Rich Capital said a delay in reporting the letters was due to several factors including the defamatory materials they contained to which Mr Wang had objected.

It also believes the letters were "attempts by KIB to embarrass the company and to abuse the public announcement platform that all Catalist companies have to comply with".

The Catalist-listed firm's shares have been voluntarily suspended since June 27. They last traded at 0.3 Singapore cent on June 21.