Accounting Fraud/Scandal: Welli Multi’s Case

Energreen Corporation is the latest name for Welli MultiCorporation Bhd.(also have name to Four Seasons Malaysia Bhd)  was previously queried by  the Malaysian Securities Commission (SC) over the authenticity of its trade receivables of RM113 million over  total trade receivables of Rm113 million as at 31 st December 2005
 

Details:

·         The company’s former managing director Ang Sun Beng and former executive director Ang Soon An were charged by the Securities Commission (SC) with four counts of providing misleading financial statements to both the SC and Bursa Malaysia Securities Bhd.

• Both brothers were released on bail of RM150,000 each with the stipulation that both surrender their international passports to the court. If convicted, each faces a fine of up to RM3 million or a maximum jail term of 10 years, or both.
  The alleged offences were committed in contravention of Section 122B(a)(bb), read together with section 122(1) of the Securities Industry Act 1983 (SIA). The alleged misleading statements relate to Welli Multi’s revenue figures in the audited statements for the year ending Dec 31, 2005 and its quarterly reports for the financial periods ended March 21, June 30 and Sept 30, 2006
• The SC also compounded Welli Multi’s former executive director and chief executive officer Tan Chin Han for RM100,000 for knowingly authorising the furnishing of a misleading statement to Bursa Malaysia on Feb 28 last year. The misleading statements were in relation to Welli Multi’s revenue figures for the three months ended Sept 30, 2006 and are in breach of Section 122B of SIA.

Append below the announcement by Welli dated 26/6/2007 extracted from Bursa Saham’s website:
 

“On behalf of the Board of Directors, we wish to inform that the Company has on 26 June 2007 received a letter from Securities Commission (”SC”) requiring Welli to withhold the issuance and public release of the Quarterly Reports for the quarters ended 31 December 2006 and 31 March 2007, and the Audited Financial Statements for the period ended 31 March 2007.

In view of the information received by the SC with regard to the authenticity and/or recoverability of trade receivables amounting to RM113million out of a total of RM135million as at 31 December 2005, SC is of the opinion that the same would have an impact on the price/value and market activities of Welli’s securities.

In the interest of ensuring only accurate financial information is disseminated to the investing public, it is therefore necessary for the Company to withhold the issuance and public release of the aforesaid quarterly reports and audited financial statements, until the issue is resolved to the satisfaction of the SC.”
 

Prior to the aforesaid event, we have a chain of other interesting announcements (extracted from Bursa Saham’s website)
 

14/6/2007 Announcement

 – Welli’s Board of Director received requisitions from the shareholders, namely Tan Kim Oh, Yoon Kok Chuan and Ke-Zan Nominees (Tempatan) Sdn Bhd, which represent a total of 10.17% of the equity interest in WELLI for the “Notice of removal of Messrs Deloitte KassimChan as Auditors of WELLI (”Proposed Removal of Auditors); and Notice of nomination for the appointment of Messrs Moore Stephens as new Auditors of  WELLI in place of Messrs Deloitte KassimChan for the financial period ended 31 March 2007”

26/6/07 Announcement

– Notice of Extraordinary General Meeting for  existing external auditor, Deloitte KassimChan be removed as Auditors of the Company with immediate effect and Moore Stephens be appointed as Auditors of the Company in place of Deloitte KassimChan in respect of the financial period ended 31 March 2007 and to hold office until the conclusion of the next Annual General Meeting at a remuneration to be determined by the Directors.

Early 2007 to End May 2007

- a series of changes in membership of boardroom, company secretaries, audit committee, sub-committee

Public announcement dated 28 November 2006 of  Fire in The Building Premises

- “ Welli Multi Corporation Berhad (”the Company”) regrets to inform that a fire broke out in the Administration Department of the Company on 25 November 2006. The estimated loss from the fire is approximately RM200,000.00 (Two Hundred Thousand) only. The cause of the fire is not known at this juncture .

As a result of the fire, the Company will be seeking the approval of the Bursa Malaysia Securities Berhad to defer the release of the quarterly results for the financial period ended 30 September 2006 until such time as the Company is able to compile the financial accounts of the Group.

In the Malaysian Stock Exchange we have so many public listed companies hence the ability  to specifically  query or identify ficititious/authenticity