This article was originally published on Saturday, 7 September 2019 at 21:59; it has since been updated with additional statements from TEE International.
TEE International said Saturday it will appoint an external third-party investigator to examine payments that weren’t disclosed to the board and/or executive committee.
The investigator will look into the circumstances surrounding the remittances, assess the potential impact on the company’s financial statements and determine if there were any other, similar transactions, TEE International said in a filing to SGX.
The move was prompted after the company received a letter from the external auditor, Deloitte & Touche, on Friday, the filing said.
“The Deloitte letter stated that during the conduct of the audit, Deloitte has been unable to ascertain the nature and purpose of the remittances and the benefits, if any, … that may accrue to the group,” TEE International said.
Deloitte added that it wouldn’t be able to complete the audit until it received more information from the company on the circumstances surrounding the remittances, including whether they were for business purposes and if they complied with applicable laws and regulations, according to the filing.
The auditor was also seeking more information on whether there were any other unauthorized payments and if there were any more similar payments made to or for the benefit of Phua Chian Kin, group chief executive and managing director of TEE International, and/or his family members, the filing said.
The company said Wednesday it identified the payments to related parties and company subsidiaries which were made and/or received under the instruction of Phua Chian Kin.
The monies have been fully repaid by and to the group, TEE International said Wednesday, adding the payments were discovered while preparing the full-year financial statements for the fiscal year ended 31 May.
The related parties, which all both received and paid remittances, 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.
In response to queries from SGX, TEE International said on Sunday that the remittances, amounting to S$3 million were recorded in the “other receivable” account at the end of the financial year, but that Deloitte was unable to verify the nature of the remittances, including what they paid for or to whom they were paid.
“Mr. Phua claimed that these remittances have been used to pay for certain expenses to secure a relevant engineering project for, on behalf, and exclusively for the benefit of, the group. However, no supporting documents have been provided by Mr. Phua to support the nature of these remittances,” TEE International said Sunday.
On Friday, TEE International said Phua Boon Kin will be appointed as interim group chief executive and managing director in place of Phua Chian Kin, who will be relieved of his duties.
Phua Chian Kin will remain an employee and will complete certain outstanding tasks when instructed by the executive committee, TEE International said in a filing to SGX.
Phua Boon Kin will succeed Phua Chian Kin as a member of the executive committee and nominating committee, effective immediately, the filing said.
On Saturday, TEE International said it would apply to SGX for an extension of time to hold its annual general meeting for fiscal 2019 and to file its fiscal first quarter results.
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