The Singapore Exchange has directed Medi-Flex to lodge a report with the Commercial Affairs Department and the relevant authorities in Malaysia against former directors -- founder Tu Ah Kim and executive director Hew Yew Fook -- for authorising disbursements of company’s funds to benefit Tu.
On 8 July 2009, Ernst & Young Advisory Services Sdn Bhd was hired to determine the value of certain factory equipment purchased by the company’s former board in 2005 after Top Glove Sdn Bhd became the new controlling shareholder of Medi-Flex.
The auditors found a discrepancy between the value of the equipment and its recorded book value of RM16 million, leading Medi-Flex filed a claim against Tu for about RM8.3 million.
From its investigations, Ernst & Young also noted that payment for the equipment were made to a sole proprietorship called HMT which had closed its business in 2003 and that the address stated on the HMT invoices did not exist.
A total of 36 payments were also made in relation to the 2005 equipment to entities or persons other than HMT.
Furthermore, the cash cheques were found to have been encashed by former Flexitech staff, Liau Lee Hoon, Lim Lee Peng and Wong Chew Yeh respectively. The bulk of the cheques, amounting to at least RM5.1 million, were deposited into Tu Ah Kim’s bank accounts.
All the payments were also approved solely by Tu or jointly with Hew.
“The Exchange is of the view that the Former Directors failed to comply with Listing Rule 103(5) to act in the interests of shareholders as a whole. In addition, they have not demonstrated the qualities and standards expected of directors and the management of SGX- listed companies, as required under Listing Rules 210(5)(b) and 720,” says SGX.
The exchange also noted the possible involvement former employees of Medi-Flex and its subsidiary, Flexitech Sdn Bhd.
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