KUALA LUMPUR (Aug 15): Datuk Shahriman Shamsudin, the managing director (MD) of Sapura Resources Bhd (KL:SAPRES), a 51.84%-owned unit of Sapura Holdings Sdn Bhd, has been instructed to abstain from managing the group's aviation business to avoid a conflict of interest.

This follows a report by the New Straits Times on Thursday highlighting that Shahriman is a shareholder and executive director of Explorer Group Sdn Bhd and also the MD of Sapura Resources. Both companies are involved and/or interested in the aviation business including maintenance, repair and overhaul (MRO).

In a filing with Bursa Malaysia on Thursday, Sapura Resources said a Board Aviation Management Committee has been formed to undertake his role. The chief operating officer of aviation and all the heads in the aviation business will report to this committee, it added.

In July last year, Sapura Resources said it was planning to dispose of its entire interest in two of its aviation arms, namely Sapura Aero Sdn Bhd and DNEST Aviation Sdn Bhd, for a total of RM79.96 million to Abu Dhabi-based private jet operator Royal Jet LLC.

Sapura Resources said the decision to exit the commercial MRO segment was due to incurred losses and to refocus its resources on the more mature revenue-generating segments.

In December 2023, however, it was reported that Explorer Group, in which Shahriman is a shareholder and executive director, and Royal Jet had signed a separate memorandum of understanding to collaborate on private flight operations based at the Sultan Abdul Aziz Shah Airport in Subang, Selangor.

"As Sapura Resources' aviation business is the business of hangarage, ground handling and aircraft management and potentially private jet MRO, the board is aware that there may be competition if Explorer Group together with Royal Jet embarks into the hangarage, ground handling, aircraft management services and private jet MRO businesses.

"The board is currently getting more information on this matter and is in the process of assessing the options available to address the competition and conflict situation. The appropriate announcements will be made in due course," said Sapura Resources.

"The company assures all shareholders that we will comply with all provisions of the law and the board will continue to exercise its fiduciary duties in the best interest of the company and adhere to the good corporate governance standards," it added.

Sapura Resources shares closed up one sen or 3.64% at 28.5 sen on Thursday, giving it a market capitalisation of RM73.89 million. The stock has fallen 22.97% so far this year.