Bangkok, 12 June 2018 – The SEC has filed a criminal complaint against 11 directors and former directors of Energy Earth Public Company Limited (EARTH) to the Department of Special Investigation (DSI) for permitting false entries to be made or failing to enter material statement relating to the increased debt of THB 26,000 million, with a view to deceiving the investors and creditors in being aware of the fact of the debt, these directors and former directors were namely (1) Mr. Phisudhi Phihakendr; (2) Mr. Khajohnpong Khamdee; (3) Mr. Thanawat Pratoomsuwan; (4) Mr. Phiroon Phihakendr; (5) Mr. Phipat Phihakendr; (6) Mr. Phiboon Phihakendr; (7) Miss Kanchana Chakvichitsopon; (8) Mr. Somkiat Sukdheva; (9) Mr. Suriyaporn Bunchai; (10) Mr. Eknarin Thammaraks; and (11) Mr. Thongchai Watanasoponwong.
The allegation is a consequence of various
complaints lodged in relation to the increased debt of THB 26,000
million following EARTH’s submission of the financial statement for the
first quarter of 2017. The increased debt
resulted in a decrease of shareholders’ equity of THB 10,349 million,
to become minus THB 15,651 million. In addition, in July 2017 the Board of
Directors had resolved to approve that EARTH underwent a business
rehabilitation process. The SEC, then,
had a question regarding the existence and status of the increased debt of THB 26,000 million.
The
investigation conducted by the SEC reveals that in the minutes of the Board of
Directors’ Meeting, and information disclosed by EARTH, via
the information disclosure system of the Stock Exchange of Thailand on several
occasions, EARTH did not present any clear facts of whether the increased debt
was mostly special circumstance
damages
or opportunity costs. According to the special
audit conducted by EARTH at the instruction of the SEC, such kind of debt could
not be legally recorded in the financial statement in accordance with the
applicable accounting standards. In
addition, one of the appointed legal advisor was of the opinion that, subject to the
contract, EARTH, as the contracting party, was not required to be responsible
for the debt in relation to the special circumstance damages. Furthermore, EARTH had failed to verify the details
of the debt prior to consolidating these sorts of debts in its liabilities and
filing an application for a business rehabilitation process.
Considering
that the 11 directors and former directors of EARTH had jointly acted, conspired,
permitted, or helped another in making false entries or failing to enter
material statement in relation of the debt, for the purpose of deceiving
investors and creditors into believing that that EARTH’s debt was greater than
its assets, which constituted an offense under Section 312 of
the Securities and Exchange Act B.E. 2535 (1992), The SEC, therefore, filed a criminal
complaint against the offenders to the Department
of Special Investigation (DSI), in order to
take appropriate legal action. This
criminal offense may result in imprisonment for a term of five to ten years and
a fine of THB 500,000 to THB 1 million. The SEC is also investigating
other issues in connection with the fair value of assets and records of accounts,
and if there is any offense under the Securities and Exchange Act B.E. 2535 (1992) the SEC will take further legal action.
Due
to the criminal complaint resulting in the fact that the directors and former
directors is deemed untrustworthy to perform duties as directors and executives
of a securities issuing company and listed company under the relevant
notification, they, therefore, can no longer perform their duties as directors
or executives of a securities issuing company and listed company during the
period they are prosecuted.
In
addition, the criminal complaint by the SEC is only the beginning point
of the criminal enforcement process.
Under this process, in order to adjudicate whether a person has
committed an offense it will depend on the investigation under the authority of
the Department of Special Investigation, the prosecution by
the public prosecutor, as well as the discretion of the court of justice,
respectively.
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The information contained in this news release
is as of the aforementioned release date. For those who wish to see the current
status of the matter, please refer to complaint filed with inquiry officer.