TROUBLED waste recycler Sino-Environment Technology was thrown into even more turmoil yesterday, when four key members of its senior management quit.

Packing their bags are the company's:

• Executive chairman and chief executive Sun Jiangrong, 42;
• Chief operating officer You Shengquan, 43;
• Chief technical officer Li Shouxin, 67; and
• Finance controller of its China subsidiaries, Madam Lin Xin, 44.

Market observers said the dramatic exit of a firm's entire senior management may be an unwelcome first for a Singapore-listed company.

The firm's three independent directors - Mr Goh Chee Wee, Dr Wong Chiang Yin and Mr Pan Jinquan - said the departures were detrimental to the company and asked that the four executives reconsider.

Yesterday's resignations raise concerns about the day-to-day running of the company, particularly as Sino-Environment did not give details on how it would function in the interim.

Market observers also pointed out that the chairman of a Chinese company usually controls the corporate seals that are affixed to contracts. Amid this uncertainty, the risk is that Sino-Environment may be entering into contracts that are not authorised.

Mr Sun, Mr You and Professor Li are also directors, but they have not resigned from the board. Mr Sun remains as chairman. While he is now non-executive, he can still veto board decisions. Mr You and Prof Li are now non-executive directors.

It is also not clear if Mr Sun, Mr You and Prof Li have breached their service agreements, as Mr Sun was supposed to give six months' notice, while Mr You and Prof Li have to give three months' notice.

Shook Lin & Bok lawyer Robson Lee, who is an independent director on various boards, said: 'Such a mass exodus is a very rare situation and is of grave concern to shareholders and the market as to what are the senior management's future plans.'

He added that the independent directors should quickly decide whether it is necessary to establish a new management team, while waiting to see if the outgoing team has a change of heart.

Sino-Environment first hit the headlines in March with reports that Mr Sun's stake was being force-sold. It emerged that he had pledged his entire 56.3 per cent stake in the firm as collateral for a loan.

The financial crisis and the plunging share price caused Mr Sun to default on certain financial obligations to hedge funds managed by Stark Investments (Hong Kong). This led to his shares being sold.

Yesterday's resignations raise the stakes for the firm even more.

Sino-Environment said yesterday that a substantial bondholder had requested the company to take immediate steps to safeguard its cash. It said it will appoint an acting chief financial officer to conduct an internal review of bank transactions.

The firm's shares closed half a cent higher at 8.5 cents yesterday, with 36 million units traded. A year ago, it traded at $2.09.

The news of the resignations was released after the market closed.

This article was first published in The Straits Times.