RH Petrogas Limited has released the executive summary of an independent review conducted by PricewaterhouseCoopers Risk Services Pte. Ltd. into whistle-blower allegations concerning its Indonesian subsidiaries, Petrogas (Basin) Limited and Petrogas (Island) Limited.
The review, commissioned on May 16 2024 and covering the period from Jan, 1 2021 to Mar, 31 2024, assessed eight areas raised in a series of whistle-blower letters received between Jan 2024 and Nov 2024. The matters examined included relationships with the group’s minority shareholder, procurement practices, oil-spill reporting, alleged bribery attempts, employment issues, senior management conduct, the effectiveness of the whistle-blowing framework and board-level governance over key appointments.
Key observations noted by PwC include: • Significant related-party exposure, with payments to entities linked to the minority shareholder and its affiliates rising each year during the review period. • Material irregularities in the award of bundled core drilling services, including indications that the winning bidder had been informally earmarked in advance, the use of a direct-negotiation procurement method introduced without the Singapore headquarters’ knowledge, and cost overruns on the Riam-1 well. • Inadequate dissemination of the group’s whistle-blowing policy until Jan 2024, and weaknesses in safeguarding whistle-blower confidentiality. • Evidence of an oil-spill incident in early Jan 2021 that was not escalated to Singapore management or regulators, contrary to internal procedures; inconsistencies were also found in production reporting. • Allegations of attempted bribery involving a government official could not be substantiated; however, PwC recommended that the company seek legal advice on potential risks. • Short-notice retirement of the former President-Director and his immediate rehiring as Senior Advisor exposed gaps in succession planning; the subsequent appointment process for a new President-Director did not fully comply with best-practice governance expectations.
PwC outlined multiple control weaknesses, including limited oversight by Singapore headquarters, deficiencies in vendor-due-diligence, and shortcomings in the internal audit and whistle-blowing functions. The firm advised RH Petrogas to obtain legal counsel on several matters, enhance procurement controls, strengthen board oversight of key management personnel appointments and remuneration, and overhaul the whistle-blowing framework to ensure confidentiality and protection for complainants.
The company stated that it had considered the recommendations and is reviewing further actions in consultation with its Audit Committee and the Singapore Exchange Regulation.