TEE International: Discovered undisclosed payments to related parties

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TEE International said Wednesday it has identified payments of around S$13.1 million made to related parties and company subsidiaries which weren’t disclosed to the board and/or executive committee.

The remittances were made and/or received under the instruction of Phua Chian Kin, group chief executive and managing director of TEE International, the company said in a filing to SGX.

“The audit committee has implemented interim enhanced internal control measures in relation to all payments or remittances by and to related parties of the group (including Mr. Phua) and have removed Mr. Phua as an authorized signatory for all payments,” TEE International said.

Shenton Wire was unable to contact Phua for comment.

The monies have been fully repaid by and to the group, TEE International said, adding the payments were discovered while preparing the full-year financial statements for the fiscal year ended 31 May.

The related parties all both received and paid remittances, the filing said.

Those related parties were Oscar Investment, a British Virgin Islands-based company wholly owned by Phua, TEE’s wholly owned subsidiaries PBT Engineering and Trans Equatorial Engineering, and Phua, the filing said.

The boards of directors of PBT Engineering and Trans Equatorial Engineering also weren’t informed of the payments, TEE International said.

In particular, the company pointed to a S$3 million payment described in its full-year financial statements as an advance to secure new engineering projects and said it would be “more properly classified” as an unauthorized remittance to Phua-controlled Oscar Investment. Phua has fully repaid the amount, the filing said.

TEE International said it instructed its external and internal auditors — Deloitte & Touche and Protiviti, respectively — to conduct further checks to verify the nature of the remittances and whether there were any others. It also said it asked the auditors to strengthen internal controls, including for authorizing payments by subsidiaries.

Pending the completion of a review, the audit committee has recommended Phua recuse himself as group chief executive and from voting on the board, the filing said, adding the audit and nominating committees have proposed Eric Phua as interim group chief executive. The board is considering the recommendations, the filing said.

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