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Rich Capital's board acts to rectify 'protocol lapse'
THE board of Rich Capital said on Tuesday that it has been made aware of a lapse within the group - specifically, an approximately S$2 million payment for a development project in Batam that was not made according to terms agreed upon.
Rich Capital's independent director Sovann Giang said in an announcement that the matter had come to the attention of the company's audit committee during a meeting on May 29. Per a letter of award signed in October, Rich-Link Construction Pte Ltd (RLC) had been awarded a S$125 million contract by Rich Capital's indirectly owned subsidiary PT Oxley Karya Indo Batam (PT OKIB), in relation to Rich Capital's property development project in Batam, Indonesia.
According to the letter, PT OKIB can make an advance payment to RLC, equivalent to S$1.25 million or 10 per cent of the contract sum of S$12.5 million, when RLC submits an advance payment guarantee.
However, Rich Capital's audit committee learnt that RLC had asked for an advance payment of S$2 million to be made even though it had not provided the advance payment guarantee; and Rich Capital had made the payment to RLC, on behalf of PT OKIB, in November.
"Management has informed the (audit committee) that the payment was processed due to commercial exigencies, but it is acknowledged that this was indeed a lapse in protocols," the announcement said.
The audit committee went on to say that it is "of the opinion that there had been a lapse ... (and) has directed to rectify this non-compliance". It has tasked the company's financial controller with additional compliance duties, and has also instructed Rich Capital's management to obtain legal advice from a competent Indonesian law firm and to work with shareholders of PT OKIB to protect the interest of Rich Capital's shareholders.