SGX’s Listings Disciplinary Committee reprimands Tee Intl, former CEO and former CFO

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SGX-ST Listings Disciplinary Committee has reprimanded Tee International, its former Executive Director and CEO Phua Chian Kin and its former Chief Financial Officer Yeo Ai Mei over remittances which were improperly disclosed and made to Phua, according to a statement filed to SGX Friday.

The charges

Tee International was charged by the exchange for failing to disclose information about the remittances in the company’s annual report for the fiscal year ended 31 May 2019, and for failing to have adequate and effective systems of internal controls and risk management, the filig said.

Phua was charged with overriding the company’s payment controls, resulting in internal control lapses, and with failing to “demonstrate the character and integrity expected of a director and senior management of a listed issuer,” the filing said.

Yeo was charged with causing the company’s failure to disclose information about the remittances in the annual report and for overriding the company’s payment controls, resulting in the internal control lapses, the filing said.

Tee International and Phua both pleaded guilty to both charges against them, and Yeo pleaded guilty to the second charge, and consented for the first charge to be considered by LDC when determining sanctions.

The LDC imposed only a public reprimand on Phua and Yeo as Phua did not contest his liability and he had committed that he won’t seek future appointments at listed companies, and as Yeo did not contest her liability and did not appear to have dishonest intention and had attempted to obtain supporting documents for the remittances.

The remittances

The LDC found that in September 2019, the company discovered unauthorised remittances of money between Phau, Oscar Investment, PBT Engineering (PBT) and Trans Equatorial Engineering. Oscar Investment is an investment holding company wholly owned by Phua, while PBT and Trans Equatorial are wholly owned subsidiaries of Tee International.

The company appointed an external investigator, PricewaterhouseCoopers Risk Services (PwC), in mid-September 2019, and proceeded to issue its Annual Report for fiscal 2019 in November. But because Yeo had failed to record the remittances as interested person transactions, Tee International did not property disclose them in the report, the filing said.

Remittance 1

The PwC report, released in March 2020, found that in February 2019, Trans paid S$500,000 to Phua’s personal bank account, with the approval of both Phua and Yeo as the authorised signatories. The payment voucher stated the transfer was for miscellaneous payment, but Yeo didn’t cite supporting documents before giving her approval.

“During his interview with PwC, Phua explained that his request was in relation to certain business opportunities that would allow the group to secure sizeable projects. He said that he felt it would be appropriate for him to request a loan from the group as he had
previously provided financial assistance to the group,” the filing said

But in an October 2019 letter, Phua told the company’s internal auditors, Protiviti, he had used the funds to repay an outstanding personal loan to moneylender MWA Capital and for margin calls from stock brokers, the filing said.

Remittance 2

In March 2019, two payments totalling S$3 million were made by PBT and Trans to Oscar Investments, with Yeo approving both transfers, the filing said. As with remittance 1, Yeo approved the transfers without citing supporting documents, the filing said.

In an interview with external auditors Deloitte & Touche, Phua represented that the payments were used as a facilitation fee for a project, and at an audit committee meeting, he said it was used to get the company short-listed for tender submission for a construction project, the filing said.

Later, he told Protiviti the S$3 million was used for partial repayment of a personal loan from MWA Capital, partial repayment of a loan to Oscar from a private equity firm and to meet obligations, such as margin top-up requests from stock brokers, the filing said.

“During his interview with PwC, Phua said that his statements to Deloitte and the AC were erroneous as he did not want Deloitte and the AC to know that he was in urgent need for cash. Phua explained that he had lent and also periodically borrowed money from third parties to personally fund the Group when it was in financial need whereas this time he was the one who needed the money.”

The S$3 million was repaid in August 2019, the filing said.

Remittance 3

In March 2019, a payment of S$250,000 was made from Trans to MWA Capital, with the cheque jointly signed by Phua and Yeo.

Phua told Yeo it was for a corporate exercise and Yeo didn’t cite any supporting documents before approving the transfer, the filing said, noting the payment voucher described the transaction as a cash transfer to Oscar Investment.

At a pre-board meeting in July 2019, Phua stated the transfer was made from Trans to Oscar for business development purposes, but in its interview with PwC, he said the funds were “required urgently” as partial payment for his personal loan from MWA Capital.

“Regarding the payment recipient being MWA Capital and not Oscar, Yeo explained to PwC that she did not see the need to make a distinction on the beneficiary of the funds transfer in the payment voucher as it was ultimately a payment on behalf of Phua.”

At end-May 2019, a S$250,000 payment was made to Trans from a subcontractor and recorded as repayment from Oscar Investments, even though it wasn’t paid by Oscar Investments, the filing said.

Read the full Grounds of Decision report from the Listings Disciplinary Proceeding.