Key director resigns at Seattle-based China firm L&L Energy
L&L Energy, the Seattle-based China coal mining company that is the subject of fraud claims by a short-selling research firm, disclosed late Wednesday that the board member leading an investigation into those allegations had resigned nine days ago.
By Rami Grunbaum
Seattle Times deputy business editor
L&L Energy, the Seattle-based China coal mining company that is the subject of fraud claims by a short-selling research firm, disclosed late Wednesday that the board member leading an investigation into those allegations had resigned nine days ago.
Mohan Datwani, the independent director who headed both L&L’s audit committee and the special investigation committee appointed to probe the September fraud claims, complained that the company had “not provided adequate financial support” for the investigation and “has not kept me fully informed as to the degree and extent of ongoing government and regulatory investigations.”
Those complaints, in emailed correspondence from Datwani to L&L’s management, were disclosed in a regulatory filing by the company Wednesday.
Datwani resigned Nov. 18, the day Nasdaq halted trading in L&L’s shares. The exchange’s website said trading was halted until the company provides unspecified additional information.
Datwani, formerly a partner of a U.S.-based international law firm who worked on corporate deals in China and Mongolia, became an advisor to L&L in 2011, according to company filings.
In one email Datwani wrote that “as I remain an investor of the Company, I believe that it is in the interest of all investors to have the special investigation committee provide an impartial view on allegations made against the Company based on independent investigations from professional legal and forensic accountants. As such, I call for real progress on the appointment of the forensic accountants with scope in accordance with impartial legal advice.”
The company’s filing with the Securities and Exchange Commission said it is “disappointed that Mr. Datwani believes that he was not fully informed as a board member.” It noted that “none of the current board members have expressed dissatisfaction with the Company’s disclosures to the Board of Directors.”
L&L, headquartered in an office park near Southcenter, says it brings American-style management to small, inefficient coal operations in rural southern China.
Beginning in 2006, founder and CEO Dickson Lee has announced a series of coal-property acquisitions, swaps and sales that lifted its reported annual revenues to $199 million and its profit margin to 19 percent.
But in September a lengthy report from GeoInvesting, a Pennsylvania firm that would profit from a drop in L&L’s stock, claimed the company’s many transactions mask “a shell game” and it is “booking substantial revenue from operations that have been idled for quite some time.”
L&L denied those allegations and said a committee of its independent directors would conduct a thorough investigation.
In response to questions about his resignation, Datwani said in an email that his departure should “serve as an impetus to the Company to accelerate the work of the special investigation committee and good will come out of it.”
He added that “there are good people in the Company and management needs to listen to the excellent advice” of its outside attorney, Mark Bartlett of Davis Wright Tremaine.
The law firm’s website describes Bartlett as a former assistant U.S. Attorney whose specialties include internal investigations and “assisting businesses and individuals facing criminal and civil government enforcement proceedings and investigations.”
Rami Grunbaum: 206-464-8541 or rgrunbaum@seattletimes.com
source: https://seattletimes.com/html/businesstechnology/2022341119_llendirectorxml.html