SYDNEY (Reuters) - An Australia-listed Chinese citrus grower said the abrupt resignations in June of its chief executive and almost the entire board came after a rumored investigation of criminal connections to its plantations in China.
The firm, Dongfang Modern Agriculture Holding Group Ltd (AX:DFM), gave no explanation when the resignations occurred last month but attributed them to the rumors in a letter to the Australian Securities Exchange (ASX) late on Thursday. The letter added that the rumors were false.
In the letter, Dongfang's lawyers said the company believed two directors quit after hearing rumors that officials in the southeast China city of Ganzhou interviewed staff and were investigating "criminal connections".
"These rumors were not true," said the letter, which was published by the ASX.
"Because the independent directors could not investigate this rumor for themselves by visiting the plantations they tendered their resignation due to the seriousness of the rumors even though the rumors were false."
Those resignations prompted two more directors to quit and then the CEO, Chiu So, "resigned also because he was seeking another career development", the letter said. The company secretary then also quit.
Shares in Dongfang, which listed at A$1.06 in 2015, were suspended in June after the resignations left them without a sufficient number of directors. They last traded at A$0.83, giving the firm a market capitalization just below A$350 million ($250 million).
Dongfang did not respond to an emailed request for comment. Former CEO So said by phone the rumors were wrong, without elaborating.
"I have already resigned. Please contact the company to ask for more information," he said. "I have nothing more to say."
Dongfang is among dozens of small Chinese firms to list in Australia in recent years, lured by the prospect of a simpler public offering process and less volatility than markets at home.
It was among more than 40 Chinese firms that the ASX wrote to in 2017 asking whether China's crackdown on capital outflows presents them any difficulties.
Dongfang said it was actively looking for replacement directors.
The company said in March that it had sold more than 280,000 tonnes of fruit, including oranges and tangerines, in 2018, for a net profit of A$84.4 and an operating margin better than 45%.