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Yamada Green's asset sale arose from 'miscommunications'
THE sale of two bamboo plantations by S-Chip Yamada Green Resources that its board did not find out about until a year later was the result of a series of miscommunications, an investigation has found.
In August last year, Yamada's board was shocked to find that two subsidiaries – Sanming Shansheng Forestry Co and Nanping Lijiashan Forestry Co – had in August 2017 disposed of all their leases to moso bamboo plantations in China's Fujian province.
The audit committee hired Foo Kon Tan LLP to conduct a due diligence investigation, and its findings were shared with shareholders on Monday.
Last week, executive director Lin Weibin, who was in charge of the plantation business, resigned upon a review of the draft investigation report.
Mr Lin admitted that he had neglected his fiduciary duties as a director, shareholders learnt on Monday.
Mr Lin said he had given his written approval by fax to a certain Mr Xiong, a legal representative, with full authority to decide on the disposition of the plantations when Mr Xiong had obtained instructions from Mr Lin about how to handle the insect infestation at the plantations.
The report wrote: "By his own admission, Lin claimed that he was busy with attending to the auditing matters by the then auditors, BDO, in August 2017 and he also had personal family problems to manage at that time."
Mr Lin did not realise that his response and authority conferred on Mr Xiong would lead to a disposal of the plantations, the report wrote.
Mr Lin also said that there was "some misunderstanding in communications".
Had the plantations been disposed of, he would have expected the legal representatives to report the matter to him again upon finding suitable buyers for his approval of the disposal but they did not. This was the reason why he did not report the disposal transactions to the board, he said.
In any case, Yamada's board is of the opinion that the disposal was in the commercial interests of the group.
It allowed the group to dispose of the loss-making plantations, and all proceeds were applied towards settlement of outstanding debts owed to the purchasers for provision of maintenance, pest control and harvesting services, Yamada's board said on Monday.
Indeed, the purchasers of the land lease were Yamada's subcontractors for maintenance and pest control.
Shares of Yamada Green Resources, a China-based supplier of canned mushrooms and bamboo shoots, have been suspended from trading since September 2017.