Key Points from the Board’s Announcement

• The Board of Directors has provided a follow-up to its earlier communication regarding an independent review conducted by PricewaterhouseCoopers Risk Services Pte Ltd.
• This review was initiated after whistleblower reports raised concerns about conduct within the Company’s subsidiaries.
• The Audit and Risk Committee (ARC) engaged external legal counsel to advise on potential disciplinary or legal actions arising from the findings.

Details of Disciplinary Actions

The ARC, after completing relevant disciplinary processes and reviewing findings from both the independent review and legal counsel, determined:

• The conduct in question was not intentional, but still involved lapses categorized as medium to low severity.
• These lapses represent violations of the Group’s internal standards, though they do not amount to high-risk or malicious behavior.
• Disciplinary actions have already been taken against the employees involved. These include the issuance of formal warning letters.
• For confidentiality reasons, the Board will not disclose the identities of affected employees or specifics of disciplinary measures for each individual.
• Management has been instructed to implement further measures, such as internal training, to prevent recurrence of similar lapses.

Legal Action Considerations in Indonesia

Separately, the ARC reviewed the possibility of pursuing legal action in Indonesia against the former President Director in relation to increased costs incurred by Petrogas Indonesia, which stemmed from contract bundling practices.

• After seeking independent legal advice, the ARC considered the viability, costs, and prospects of recovery from such action.
• The ARC concluded that proceeding with legal action would not be in the Company’s interests due to anticipated difficulties and significant costs, coupled with uncertain chances of recovery.

Implications for Shareholders and Potential Impact on Share Price

• This update provides transparency and closure regarding the whistleblower allegations and the subsequent independent review.
• The findings indicate no intentional misconduct or high-severity breaches, which may help reassure investors concerning the integrity of management and operations.
• Immediate disciplinary action has been taken, and preventive measures are being put in place, demonstrating proactive governance by the Board.
• The decision not to pursue legal action against the former President Director, despite increased costs from contract bundling, may raise concerns about unrecovered losses. However, the Board has weighed the costs and prospects carefully, prioritizing the Company’s interests.
• While the report contains no evidence of material fraud or criminal conduct, shareholders should monitor for any future updates on governance and compliance enhancements.

Conclusion

Overall, the Board’s actions signal a commitment to internal standards and transparency. The resolution of disciplinary matters and the decision regarding legal action provide clarity for investors. There may be some short-term impact on share price due to concerns about unrecovered costs and internal lapses, but the medium-low severity assessment and immediate corrective actions could mitigate negative sentiment.

Disclaimer: This article is based on public disclosures by RH Petrogas Limited. It does not constitute investment advice. Investors should conduct their own due diligence and consult with professional advisors before making any investment decisions.

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