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Accounting Fraud In Malaysia:DIS Technology Holding Bhd

slang — Wed, 21 Apr 2010 05:44:21 +0000

Accounting fraud in malaysia:DIS Technology Holding Bhd

DIS Techology Holding Bhd (DIST)(0063) which is listed on Bursa Malaysia’s ACE Market, intend to reinstate its financial results in the past few quarters due to an alleged sales fraud in Hong Kong. The fraud is pertaining to billing to an external customer Starlight Marketing Ltd located in Hong Kong.

Append below the HEAVILY overestimated figures on sales and profit before tax(extracted from Bursa Saham):-

Potential Financial Impact to Sales & PBT Due to Misstatement

DIS Working Capital BEFORE HEAVILY OVERSTATING TRADE RECEIVABLES

As this is an artificial non cash transaction, the double entry is to reverse the group sales and trade receivables leaving an adjusted NET CURRENT LIABILITIES where the group will not able to service its bankers, creditors and other lenders. According to its group managing director Dustin Cheah of the RM131.33 million, the balance still owed to it as of end-December 2009 stood at RM82.07 million. Imagine what is DIS group sales for year ended 31 st December 2009 and 2008 -RM181 million RM139 million, hence this mistatement/fraud has tremendous financial impact to its company financial performance.

A little bit of history of DIS Technology Holding Bhd:

DIS Technology Holdings Berhad (“DIST”), an MSC status company( achieved MSC status in 2002)
Listed in MESDAQ or now called ACE in year 2004
A leading electronic device innovator and trendsetter in Malaysia.
Located in Penang – the Silicon Valley of Malaysia
DIST comprises of seven wholly owned subsidiaries – Digital Integrated System Sdn. Bhd. (“DIS”), Dis Technology (HK) Limited, Modern Solution Sdn. Bhd. (“MSSB”) and Zeon Computer (M) Sdn. Bhd, Home Touch Solution (North) Sdn. Bhd., DIS B2B Int’l (HK) Limited and Unieksoft Solutions Sdn. Bhd.
Achieved numerous prestigious awards like the Asia Pacific International Honesty Enterprise-Keris Award 2004, Business of the Year Award 2004, Asia Pacific e-Entrepreneur Excellence Brand Award 2005, PIKOM – Computimes ICT Award 2005, PIKOM – Finalist Award in 2006, Asia Pacific Super Excellent Brand 2006 / 2007, 5th Asia Pacific International Honesty Enterprise Keris Award 2006, Platinum Recognition for Malaysia’s Top 50 Enterprise Award and Malaysia Independence Award 2009 being the latest accolade.

My two cents worth:

If these fraudulent figures are reinstated, both the income statement and balance sheet will turn very ugly. With this ugly side revealed, investors can then see clearly that DIS group will not be able to services it debts providers/other lenders and if no further fresh capital injection might turn to a PN17 company. However, the question ultimately lies with whats really has happened. In the listing requirement at least one third of the board belongs to non-independent directors but yet this MASSIVE reinstatement happens. We are not talking about kacang puteh figures. Its really quite scary to think of it! BTW -would you want to be CFO in that group – I bet you will be having nightmares!

Accounting Fraud/ Irregularities in PN17 Company Ho Hup Construction Company Bhd

slang — Thu, 21 Jan 2010 10:07:15 +0000

Accounting fraud in malaysia-Ho Hup Bhd

Recently, the board of directors of PN17 Ho Hup has announced to Bursa Saham Malaysia that it will conduct an independent final investigative audit report relating to business losses recorded for financial years ended from 31 st December 2001 to 2008.

The lengthy announcement which is self-explanatory to Bursa Saham dated 19 th January 2010 is as follows:

(1) Dato’ Low Tuck Choy (“LTC”) was suspended as the Company’s Managing Director on 28.8.2008 on the grounds of, among others, certain breaches of duties owed by LTC to the Company which had caused substantial business loss to the Company (“LTC’s Suspension”). The Company has made a general announcement in respect of LTC’s Suspension on 29.8.2008 and 3.9.2008;

(2) LTC was not re-elected as the Company’s director at the Company’s annual general meeting of shareholders held on 23.10.2008;

(3) on 1.7.2009 the Company has appointed Messrs Anuarul Azizan Chew & Co. (“Investigative Accountants”) to

(a) undertake a comprehensive investigative audit of all the business loss suffered by the Company and all the Company’s subsidiary and associated companies (“Group of Companies”) for the financial years ended on 31 December 2001 to 31 December 2008 (“Period”); and

(b) ascertain whether there is any violation of law, fraud, breach of duty and negligence in respect of the Period by the former directors and officers of the Group of Companies as well as by other third parties;

(4) on 5.8.2009, the Investigative Accountants present to the Company their Interim Investigative Audit Report for the Period (“Investigative Accountants’ First Report”);

(5) on 21.8.2009, the Company’s Audit Committee (“AC”) has considered the Investigative Accountants’ First Report and has recommended the Investigative Accountants’ First Report for the acceptance by the BOD;

(6) on 21.8.2009, the BOD has accepted the Investigative Accountants’ First Report and has directed a police report to be lodged by the Company’s management in relation to the Investigative Accountants’ First Report;

(7) on 21.8.2009, a police report has been lodged on behalf of the Company with respect to the Investigative Accountants’ First Report (“Police Report”). The Company has given full co-operation and is liaising closely with the appropriate authorities in relation to the Police Report;

(8) on 10.12.2009, the Investigative Accountants have completed their “Final Investigative Audit Report” for the Period (“Investigative Accountants’ Second Report”). The Investigative Accountants’ Second Report consists of a detailed analysis as well as findings and is supported by extensive documentary evidence.

(9) The Investigative Accountants’ First and Second Reports stated, among others, that -

(a) there existed reasonable suspicion that various offences of criminal breaches of trust, misappropriation of property and cheating under sections 409, 403 and 420 of the Penal Code respectively have been committed against the Group of Companies (“Penal Code Breaches”);

(b) there existed reasonable suspicion that various breaches of director’s duties under section 132 of the Companies Act 1965 have been committed against the Group of Companies (“Companies Act Breaches”);

(i) cash cheque payments, each above RM20,000 and totaling RM5,155,725.07, signed by, among others, LTC, without proper supporting documents;

(ii) payments via cash cheques being “promoter fees” amounting to RM2.4 million made for “Perlin Mandeera Project” in Sri Lanka authorised by, among others, LTC, when the Company had no record of such a project;

(iii) excessive progress payments amounting to RM10,626,605.12 made in Phases 1-2, 3-6 and 7A of the “Jalil Sutera Project” of 193 units of 21/2 storey link houses. Such excessive payments were not supported by any document and far exceeded the original contract construction sum. In addition, the project was delayed by more than 2 years resulting in LAD claims from purchasers amounting to RM23 million;

(iv) LTC has signed on behalf of Bukit Jalil Development Sdn Bhd (“BJD”), a 70% owned subsidiary of the Company, a Development Agreement with Syarikat Kemajuan Perumahan Negara Sdn Bhd (“SKPN”) on 16 November 2007 to develop 2 pieces of land owned by BJD measuring 66,250 sqm for a total consideration of RMRM14.5 million (to be paid over 3 years) and accepted RM1.2 million deposit, without any Board approval of the Company at that material time. Subsequently, LTC had also accepted the offer and earnest deposits amounting to RM584,367 for the same pieces of properties from Hang Foong Property Sdn Bhd & Bukit Pekeliling Sari Sdn Bhd without Board approvals of the Company. By virtue of the above transactions entered into by LTC without proper approvals, caveats were lodged by the respective parties on the said properties;

(v) appointment of LTC’s spouse, Datin Chan Bee Leng, as a Senior Advisor for BJD, without a proper engagement letter and approval by the Board of the Company and no disclosure were made in the accounts. Datin Chan received in total RM111,800 over a period of 26 months;

(vi) questionable appointment of a certain tax agent and payment by post dated cheques amounting to approximately RM1.6 million being the agreed tax agent’s “fees” when there is no evidence of any work done by that tax agent. However the Company managed to stop payment on the cheques except for the amount RM110,000;

(vii) the acceptance of road projects in Madagascar for contract sum amounting to RM216.9 million without proper feasibility study and Board approval. Furthermore, Company’s machineries of a value of RM41.8 million were shipped to Madagascar for the “Madagascar Highway Project” without BOD’s approval. The resulting termination of the contracts by Madagascar Government has resulted in total amount being claimed amounting to RM145.6 million without any certainty of recovery;

(viii) the Company had spent RM8.3 million construction cost in the “NAS Pavilion Project”, a project with a total contract sum of RM169.8 million, but had only received RM2.5 million for that project which was entered into by the Company without proper feasibility study and BOD’s approval; and

(ix) sale of Company’s machineries without independent valuation nor competitive bidding to one particular buyer, a sole proprietor, without BOD’s approval and which has caused the Company to suffer an estimated loss of RM995,500 based on the valuation by the Company.

(10) as a result of, among others, the Penal Code Breaches, the Companies Act Breaches and other breaches of fiduciary duties by LTC for the Period, the Company had taken all necessary actions including the filing of a suit against LTC at the Kuala Lumpur High Court vide suit number D-22NCC-33-2010 (“Suit”) claiming for, among others, damages amounting to RM235.6 million and legal costs. The announcement of the Suit was made by the Company on 8.1.2010.

(11) on 13.1.2010, the AC has considered the Investigative Accountants’ Second Report and has recommended the Investigative Accountants’ Second Report for the acceptance by the BOD; and

(12) on 15.1.2010, the BOD has met and deliberated extensively on the Investigative Accountants’ Second Report. Consequently, the BOD has accepted the Investigative Accountants’ Second Report based on the recommendation by AC and authorise the AC to make a report to -
(a) the police

(b) the Securities Commission, and

(d) any other authorities, the management deems necessary

to ensure that all appropriate action will be taken in respect of the Penal Code Breaches and Companies Act Breaches which have resulted in the Total Loss.

The Company’s solicitors have filed the Writ endorsed with a Statement of Claim on 8 January 2010 (“Suit”). In the Suit, the Company has claimed for, among others, damages amounting to RM235.6 million and legal costs.

ACCOUNTING FRAUD UPDATE: MEMS TECHNOLOGY BHD (MEMS)

slang — Wed, 28 Oct 2009 05:57:22 +0000

Accounting fraud in malaysia -MEMS Technology Bhd

It is quite shocking to hear that MEMS Technology Bhd, despite being publicly reprimanded and fined heavily for the breach of Listing Rule (see below paragraph) in October 2008 has still not complied with the requirements of the SC. The Securities Commission (SC) has for the second time this year instructed microelectronics maker MEMS Technology Bhd (MEMS) to comply with the applicable financial reporting standards by adjusting its reissued financial statements dated October 7 2009.

Now, SC is giving the ACE Market-listed company 14 days to do so.

What is this all about:

The statements to be ADJUSTED are MEMS’ financial years ended July 31 2007 and July 31 2008 as well as the quarterly report for the six months ended January 31 2009.
MEMS is also required to announce to Bursa Malaysia the adjustments made, reasons for the adjustments and their detailed effects on the company’s financial statements.
The decision came after MEMS’ admission in its reissued financial statements that they were not in compliance with the financial reporting standards, FRS118 “Revenue”. The SC viewed MEMS’ non-compliance with the FRS118 “Revenue” “very seriously”.
On August 4 2009, the SC directed MEMS to rectify and reissue its accounts for the financial years ended 2007 and 2008. MEMS was also to rectify and announce to Bursa Malaysia its unaudited condensed consolidated income statements for the six months ended January 31 2009.MEMS was to rectify the financial statements by excluding RM49.183 million from its revenue for all the three financial statements.

Accounting fraud:

Rational for the adjustments instructed by the SC:

Investigations by the SC revealed that the group’s revenue of RM53.699 million reported in the 2007 financial statement contained bogus sales of RM13.007 million, while the revenue of RM71.994 million reported in 2008 contained RM24.161 million sales which did not take place.
For the six months ended January 31 2009, MEMS reported revenue of RM37.366 million, of which RM12.015 million sales had not been transacted.
These sales were recorded in the financial statements of MEMS’ wholly-owned subsidiary, Senzpak (M) Sdn Bhd.

Earlier news about MEM Technology Bhd (ACE –ex Mesdaq company):-

Extracted from the Bursa Saham’s website dated 6/10/08, MEM Technology Bhd (Mesdaq) has been publicly reprimanded for the breach of Rules 9.22(1), 9.23(1), 9.24 and 9.16(1)(a) of the MMLR and were imposed fines on the following directors of MEMS in respect of the Company’s breaches of Rules 9.22(1), 9.24 and 9.16(1)(a) of the MMLR aforesaid :-

No.	Director	Penalty Imposed
1	Dato’ Ahmad Kabeer bin Mohamed Nagoor Non-Independent and Non-Executive Chairman	Public Reprimand and Fine of RM89,000
2	Kathirgamasundaram Sooriakumar Chief Executive Officer	Public Reprimand and Fine of RM197,500
3	Tan Yeow Teck Executive Director / Chief Financial Officer	Public Reprimand and Fine of RM197,500
4	Bryan Keith Patmon Executive Director	Public Reprimand and Fine of RM89,000
5	Ooi Boon Leong Non-Independent and Non-Executive Director Audit Committee Member	Public Reprimand and Fine of RM89,000
6	Lim Eng Thong Non-Independent and Non-Executive Director (Alternate Director to Ooi Boon Leong)	Public Reprimand and Fine of RM89,000

Besides the public reprimand, Bursa Securities also insists that MEMS is required to carry out a limited review on the Company’s quarterly report submission. The limited review must be performed by the Company’s external auditors for four quarters commencing from the quarter subsequent to the date hereof. The quarterly report announcements must state that it has been reviewed by the Company’s external auditors.

1.0 According to SC, MEMS had breached the following:

Rule 9.24 of the MMLR for failure to submit Company’s annual audited accounts and annual report for the financial year ended 31 July 2007 (“AAA 2007” and “AR 2007”)) on or before 30 November 2007 and 31 January 2008 respectively. The AAA 2007 and AR 2007 were only submitted on 23 April 2008 and 2 May 2008 respectively. Further, the external auditors, KPMG had expressed a disclaimer opinion in the AAA 2007 (“the Disclaimer”) and MEMS was classified as a Guidance Note No. 3/2006 company on 28 April 2008 based on the Disclaimer;
Rule 9.22(1) of the MMLR for failure to submit Company’s quarterly report for the financial period ended 31 October 2007 (“QR 1/2008”) and 31 January 2008 (“QR 2/2008”) on or before 31 December 2007 and 31 March 2008 respectively. The QR 1/2008 and QR 2/2008 were only submitted on 28 April 2008;
Rule 9.23(1) of the MMLR for failure to submit Company’s research report for the financial period ended 31 January 2008 (“RR 31/1/08”) on or before 31 March 2008. The RR 31/1/08 was only submitted on 27 June 2008; and
Rule 9.16(1)(a) of the MMLR in respect of the Company’s announcement dated 27 September 2007 on the fourth quarterly report for the financial year ended 31 December 2007 (“QR 4/2007”) which failed to take into account the adjustments as stated in the Company’s announcement dated 28 April 2008.

MEMS had reported an unaudited profit after taxation of RM21.473 million in the QR 4/2007 (“Unaudited Results”) which was announced on 27 September 2007. However, the Company had on 23 April 2008 reported an audited profit after taxation of RM13.110 million in the AAA 2007 (“Audited Results”). The decrease in the profit after taxation between the Unaudited Results and the Audited Results for the financial year ended 31 July 2007 of RM8.363 million represents a deviation of approximately 38.95% (“the Deviation”).The Deviation was mainly due to the reversal of RM19.72 million revenue arising from the Board of Directors’ decision not to recognize the revenue after KPMG has expressed its concerns as announced on 27 November 2007.

2. All Of the aforesaid directors were found to be in breach of Rule 16.11(b) of the MMLR for permitting either knowingly or where they had reasonable means of obtaining such knowledge the Company to commit the breaches of Rules 9.24, 9.22(1) and 9.16(1)(a) of the MMLR aforesaid.

3. Bursa Securities views the above contraventions seriously and hereby cautions MEMS and its Board of Directors on their responsibility to maintain appropriate standards of corporate responsibility and accountability in order to achieve greater disclosure and transparency to its shareholders and the investing public.

ACCOUNTING FRAUD UPDATE:EX-DELISTED POLYMATE HOLDINGS BHD

slang — Thu, 22 Oct 2009 08:24:50 +0000

Accounting fraud in malaysia:Ex Polymate Holdings Bhd

Recently, the KL Sessions Court has convicted Ng Kim Weng of submitting false statements to then Malaysian Securities Exchange Bhd (now Bursa Malaysia Securities Bhd).

The Securities Commission (SC) said in a statement, Ng’s conviction on Oct 20 followed his guilty plea to the offence which falls under section 122B(b)(bb) of the Securities Industry Act 1983 (SIA).

“As group managing director of Polymate Holdings Bhd at the material time, Ng had authorised the submission of false statements through the reported trade receivables and revenue in Polymate’s consolidated balance sheet and income statement for its financial year ended Sept 30, 2003,” said SC.

Ng, 57, who was also managing director of Polymate’s wholly-owned subsidiary ABI Malaysia Sdn Bhd, admitted that the figures on the consolidated balance sheet and income statement consisted of fictitious sales amounting to RM22,736,447 made to three companies which were either dormant or non-existent.

Sessions Court Judge Asmadi Hussin imposed a fine of RM300,000 (in default 12 months’ imprisonment) following Ng’s guilty plea

Earlier reports on above case:

Reported in The Edge (7/2/07):

“Polymate Holdings Bhd’s former group managing director Datuk Ng Kim Weng was charged at the Kuala Lumpur Sessions Court on Feb 7, 2007 with furnishing inflated figures in its annual report to Bursa Malaysia Securities Bhd. Mr Ng was apprehended at his house in Petaling Jaya in the morning.”

Details:

Ng, 55, who resigned from Polymate on Jan 27, 2005, pleaded not guilty to having knowingly authorised the furnishing of false information, namely inflated revenue and trade receivables as contained in its 2003 annual report.
He was charged in the Sessions Court in Kuala Lumpur on Feb 7 under Section 122B(b)(bb) of the Securities Industry Act 1983 (Act 280). Polymate is the holding company of ABI Malaysia Sdn Bhd, which produces car batteries.
Ng, who was represented by counsel Tan Hock Chuan, is alleged to have committed the offences between Jan 20, 2004 and March 5, 2004 at the Exchange Square in Bukit Kewangan.
Securities Commission prosecuting officer Charanjit Kaur told judge Akhtar the amount falsified in the case was about RM22.7 million. The prosecuting team includes deputy public prosecutor Rozmawar Rozain.
Sessions Court judge Akhtar Tahir fixed the trial date for Oct 8-12. The judge set bail at RM300,000 with one surety and ordered that Ng’s passport be handed over to the court.
On conviction, Ng is liable to a fine of up to RM3 million or jailed for a term not more than 10 years or both.

Polymate was de-listed on Oct 19, 2006 after Bursa Securities decided the company had an inadequate level of financial condition to warrant continued listing.

Accounting Fraud Updates: Megan Media Holdings Berhad

slang — Wed, 19 Aug 2009 04:20:26 +0000

Accounting fraud in malaysia: Megan Media Holdings Bhd

Kenneth Kok, ex financial controller and personal assistant to the executive director of Megan Media Holdings Berhad was fined RM350,000 in default a year’s jail by the Sessions Court for abetting the company to make a false statement to Bursa Malaysia.

This is actually a follow up by Securities Commission as it had on 10 December 2007 made an announcement to seek Interpol to help to arrest George Yeo Wee Siong who was the executive director of MMHB.

At that announcement, Kenneth Kok was charged under section 122B(a)(bb) read together with section 122C(c) of the Securities Industry Act 1983 (SIA) for abetting MMHB in furnishing to Bursa Malaysia the following false revenue figures:

RM1,034,797,000 reported in MMHB and its subsidiaries’ Financial Statements for the year ended 30 April 2006
RM230,365,000 reported in MMHB’s Quarterly Report on Consolidated Results for the financial period ended 31 July 2006
RM238,134,000 reported in MMHB’s Quarterly Report on Consolidated Results for the financial period ended 31 October 2006
RM306,150,000 reported in MMHB’s Quarterly Report on Consolidated Results for the financial period ended 31 January 2007

Dato Dr Hj Mohd Adam was charged for furnishing a false statement relating to the revenue figure of RM306,150,000 in MMHB’s Quarterly Report on Consolidated Results for the financial period ended 31 January 2007 under section 122B(a)(bb) read together with section 122(1) SIA. Upon conviction, the accused persons are liable under section 122B SIA to a fine not exceeding RM3 million or to imprisonment of not more than 10 years or to both.

In the Court, Kok Hen Sen @ Kok Liew Sen, 63, pleaded guilty to abetting the company, which is listed on Bursa Malaysia’s main board, in making a false statement that Megan Media made an income of RM1.03 billion in its subsidiaries financial statement for the year ended April 30, 2006.

He admitted that :

he allowed his company,DVD Pioneer Sdn.Bhd to be used as a customer for Megan Media.
instructed his account executive Tong Kok Yong to create fictitious sales. There were payments made for these fictitious sales from trade facilities granted to Megan Median by various financial institution.

Earlier background of Megan Media

Megan Media Holdings Bhd, which had been hit by accounting scandals, reported an unaudited net loss of RM67.19 million for the first quarter ended July 31, 2007 compared with a net profit of RM13.45 million in the previous corresponding quarter.

Announcing its results on Sept 28, it said Revenue plunged to RM11.5 million from RM230.3 million a year ago. Loss per share was 33.08 sen.

Compared with the fourth quarter ended April 30, 2007, the loss before taxation was reduced from RM1.38 billion to RM67.2 million largely due to the fact that significant write-off was made in the fourth quarter arising from the financial irregularities uncovered by the investigative audit.

Among the irregularities were fictitious trading creditors and debtors created by its subsidiary Memory Tech Sdn Bhd to overstate purchase and sales, and its financing of payments to fictitious trading creditors through bank debts.

On the prospects, the viability of the company and the group as a going concern depended “on the completion of a successful implementation of debt restructuring and regularisation plans”. Incidentally, the company has eight months, since June 19, 2007 to submit a regularisation plan to the relevant authorities. In a separate statement, it said that under Bursa Malaysia Securities’ listing requirements, it had to provide its audited financial statements for the financial year ended April 30, 2007 for public release within four months, which was on or before Aug 30, 2007. Failing to do so could result in its suspension.Meanwhile, the auditors of the company and its subsidiaries were still finalising the audit of the financial statements of the group for the financial year ended April 30, 2007. Upon completion of the audit, the company will release the audited accounts for the financial year ended April 30, 2007. [On Sept 21, Megan Media’s unit Memory Tech Sdn Bhd (MTSB) has been served a winding-up petition by Mayban Trustees Bhd in respect of a default on a total of RM472.83 million Bai Bithamin Ajil Islamic debts securities. The securities issued by MTSB were RM320 million primary bonds, RM112.27 million non-detachable secondary bonds and Hibah promissory notes of RM40.56 million. Following MTSB’s inability to honour maturing banking facilities, Mayban Trustees had issued a declaration of event of default on May 30, followed by a demand for payment of RM436.11 million on June 5, 2007.]

It has failed to submit its regularisation plan to the Securities Commission and other relevant authorities for approval within the timeframe stipulated in paragraph 8.14C of the LR and paragraph 4.0 of t PN17 i.e. by 18 February 2008 and no further extension of time has been granted by Bursa Securities.

Bursa Securities had earlier announced on 19 February 2008 that it has commenced de-listing procedures against the Company.

After due consideration of all facts and circumstances of the matter, Bursa Securities has decided to de-list the securities of the Company from the Official List of Bursa Securities as the Company does not have an adequate level of financial condition to warrant continued listing on the Official List of Bursa Securities.

Accordingly, please be informed that the securities of the Company will be removed from the Official List of Bursa Securities at 9.00 am on Wednesday, 23 April 2008

Accounting Fraud Updates: Liqua Health Corporation Bhd

slang — Wed, 19 Aug 2009 03:47:18 +0000

Accounting fraud in malaysia -Liqua Health Bhd

The securities of the Company has been removed from the Official List of Bursa Securities at 9.00 a.m. on Friday, 10 April 2009.

For some who are not aware of this de-listing, one of the factors that caused the delisting is the accounting scandal/fraud involved.

Details:

Liqua Health Corporation Bhd is a main board-listed company which is primarily involved in the selling of health food products like spirulina using the multi level marketing model/concept
It has informed Securities Commission that it had appointed chartered accounting firm Baker Tilly Monteiro Heong to conduct an investigative audit of certain transactions disclosed in the company’s fourth-quarter results for the period ended Dec 31, 2007. The special audit is to look at a transaction amounting to RM15 million paid by Liqua’s wholly owned subsidiary Liqua Health Marketing (M) Sdn Bhd to an exclusive supplier of health care products. According to the notes to the accounts for the unaudited results for the financial year ended Dec 31, 2007, Liqua stated that the money was paid to the supplier of nine core products who is supposed to deliver the products to its wholly-owned subsidiary, Liqua Health Marketing (M) Sdn Bhd.. However, the scheduled products were not received leading to the cancellation of the orders and Liqua sought repayment of the amount paid. A written confirmation and commitment to repay was given by the supplier. Notwithstanding this commitment from the supplier and pending finalisation of the proposed settlement, Liqua has made a provision for RM8 million in doubtful debts. It is believed that the probe could be to ascertain if Liqua would be required to make additional provisions and who the supplier is.

Liqua, which posted over RM11 million in net losses on the back of RM41 million revenue for the financial year ended Dec 31, 2007, has seen significant changes to the board last month. It appointed Low Donald Han as chairman in mid-March and also redesignated executive directors Rohaya Hashim and Yeoh Eng Kong to non-executive positions.
The health food marketing firm had chalked up some RM92.37 million in net losses for the financial year ended Dec 31, 2005 on the back of RM37.76 million revenue. The company booked RM78.46 million of “impairment of goodwill” for the year as stated in its 4Q05 results filing to Bursa.
Net losses shrank to Rm3.39m during the 2006 financial year, but more than tripled to Rm11.08m during the 2007 financial year, despite an improvement in revenue to Rm41.36m. At the end of FY07, Rm108.67m in accumulated losses.

Directors Of LFE Corporation Being Fined And Publicly Reprimanded By Bursa Malaysia

slang — Tue, 18 Aug 2009 14:15:51 +0000

Bursa Malaysia has publicly reprimanded LFE Corporation Bhd and fined four of its directors RM468,000 in total for a breach of the following four(4) listing requirements:

1. Paragraph 16.11(b) of the listing requirements for permitting either knowingly or where they had reasonable means of obtaining such knowledge the Company to commit the aforesaid breaches.

2. Paragraph 9.23(b) for failing to submit company’s annual audited accounts for the financial year ended Dec 31, 2007 (AAA 2007) on or before April 30, 2008. The AAA 2007 was only submitted on 30 Oct 2008.

3. Paragraph 9.23(a) for failing to submit the company’s annual report for the financial year ended Dec 31, 2007 (AR 2007) on or before 30 June 2008. The AR 2007 was only submitted on Nov 25, 2008.

4. Paragraph 9.22(1) for failing to submit the company’s quarterly report for the financial period ended March 31, 2008 (QR 1/2008) and June 30, 2008 on or before May 31, 2008 and Aug 31, 2008 respectively. The QR 1/2008 and QR 2/2008 were only submitted on Oct 30, 2008.

(a) Directors who are involved and being fined by Bursa:

· LFE Corporation managing director Lew Mew Choi, executive director Liew Kiam Woon as well as Chin Soong Jin (executive director who resigned on Dec 31, 2008) and Alan Rajendram a/l Jaya Rajendram (non-independent and non-executive director) were fined RM117,000 each.

· The four and several other directors — Chung Tack Soon, Tong Hock Sen (resigned on Jan 16, 2009) and Kee Ju-Hun (resigned on Jan 16, 2009) — received public reprimand

· No penalty was imposed on director Liew Meow Nyean.

· All its directors and the relevant personnel were instructed by Bursa to attend a training programme on listing requirements and compliance, particularly pertaining to financial statements.

(b) Accounting Irregularities/Scandal:

As there is a delay in the submission of the AAA 2007 this therefore caused the subsequent delay in the submission of the AR 2007, QR 1/2008 and QR 2/2008.

However, of concern is that there were audit concerns raised by the external auditors in the current financial year. On 31 July 2009 and in compliance with Paragraph 9.19(35) of the listing requirements of Bursa the company’s board of directors has announced in the Bursa that there is a qualification opinion in External Auditors’ Report on Audited Consolidated Financial Statements for the financial period ended 31 March 2009.

When reviewing the letter from the external auditor re: Russell Bedford LC & Company (AF1237),Chartered Accountants, the following audit notes and opinions being noted below:

· Earlier the financial statements of the LFE Group and the company for the year ended 31 December 2007 were audited by another firm of auditors whose report dated 28 October 2008 expressed a qualified opinion on those statement. The auditors were unable to satisfy themselves as to the recoverability of the amount due to the Group by a director of the Company of Rm24,144,592 and due to the Company by a subsidiary LFE International Limited of Rm4,258,568

· Follow up to the above point, as at 31 March 2009 there is an amount due to the Group by a director of the Company of Rm26,506,700 where the scheduled full repayment on or before 21 December 2008 has not been met by the director.The amount arose from an undertaking of the director pursuant to advance made for and his profit guarantee obligations of the computer products trading activities carried out by a wholly owned subsidiary of the Company, LFE International Limited (LFEI) which also gave rise to an amount due to the Company by LFEI as at 31 March 2009 of Rm17,497,026. The undertaking is secured by way of a pledge by the director of 25 million ordinary shares in Stanton Technologies Limited(“Stanton Shares”), a company incorporated in Dubai International Financial Centre. The details of the events and key matters relating to the undertaking are as discussed more fully in Note 39 to the financial statements.

Russell Bedford as external auditors are unable to satisfy themselves on whether the value of the Stanton Shares provides adequate security to cover any loss that may arise from the non repayment of the undertaking amount. Accordingly Russel Bedford are unable to satisfy themselves as to the recoverability of both the amounts due to the Group by the director of Rm26,506,700 and due to the Company by LFEI of Rm17,497,028

The Board of Directors of the Company had decided not to recognise the sum of RM126,394,533(49% of total revenue) of revenue, RM119,152,044 of cost of sales and the sum of RM6,208,229 of profit generated from the trading transactions of LFEI.

Pertinent Point on Corporate Governance:

The directors have failed to demonstrate adequate efforts taken to discharge their duties, particularly in respect of the oversight of LFEI and ensure adequate risk management and controls in respect of the trading transactions of LFEI to facilitate the audit to enable the timely preparation and submission of the financial statements.

Biggest Bank Fraud Case In China

slang — Fri, 07 Aug 2009 10:16:30 +0000

Recently reported in the Chinese Financial magazine, Caijing and Financial Times was the biggest suspected bank fraud case involving the massive sum of 1.43 billion dollars.

Some details:

Persons Involved:

Wang Sheng, ex-chairman of property developer Canton Property Investment Ltd (listed in London’s Alternative Investment Market,

Liu Changming, 45, former president of the state-controlled Bank of Communications’s Guangzhou headquarters( Bank of Communication is 18.6% owned by HSBC)

Wang also known as Keng Wong

About the Fraud:

Wang Sheng assisted by Liu Changming (ex-president of Bank) obtained the loan from state-owned Bank Of Communications vide its subsidiaries of Canton Properties without the knowledge of shareholders. Wang Sheng is supposed to be the main recipient of the loans.

Status:

Wang Sheng arrested for trial.

Liu Changming, 45, fled China before the end of 2007. He was being transferred to Wuhan and never turned up for his new job.

Wang or Keng Wong was arrested in August last year.

The case involved as much as 9.8 billion yuan (1.43 billion dollars) and # 4.6 billion yuan of the missing funds had not been recovered.

[ Canton Properties' assets, which include two shopping malls in Guangzhou, were valued at 963 million dollars.Canton Properties suspended trading in its shares, which are listed on London's Alternative Investment Market, after Wang disappeared in August 2008 and most of the company's board resigned.]

MEMS TECHNOLOGY being directed by SC To Rectify Its Financial Statements

slang — Thu, 06 Aug 2009 15:45:56 +0000

Earlier MEMS has been heftly fined and public reprimanded for breaching listing requirements.

Recently, the Securities Commission (SC) has directed MEMS Technology Bhd to rectify and re-issue its financial statements for the financial years ended July 31,2007(FY2007) and 2008(FY2008) and re-announce the Income Statements for the six months ended Jan 31 2009 within 14 days. The purpose is to ensure that investors have complete and accurate information to make informed investment decisions relating to the company. This rectification is extremely important as SC found out that MEMS had falsely reported a collective Rm37.17 mil in non existent sales in its 2007 and 2008 financial statements. MEMS is appealing to the SC for time extension as it needs to seek advice and guidance from its external auditors and or other professional advisers as may be required.

3 rd Chinese Company To Be Listed on Bursa Saham Malaysia

slang — Mon, 03 Aug 2009 12:05:21 +0000

XiDeLang is poised to be the third Chinese company to list on Bursa Malaysia after fellow shoe counterparts-Xingquan International Sports Holdings Ltd and Multi Sports Holdings Ltd.

However, the number of listing in Malaysia is very pathetic when compared to the Singapore counterpart, where more than 100 Chinese companies have already been listed in the Singapore Stock Exchange. (Incidentally at least 25 are from Guangdong, one of China’s richest provinces and a manufacturing hub). As Singapore Exchange is Asia’s second largest-listed bourse , it is therefore of no surprise that it is also the home to listings from Indonesian, Malaysian and Indian firms.

However, there are also bad things coming out with such heavy Chinese companies listed in SGX. Recently, Senior Minister, Mr. Goh Chok Tong who is the chairman of central and financial regulator of the Monetary Authority of Singapore asked Chinese firms listed in Singapore or S-chips to be more regulated in the wake of the many scandals of defrauding the public investors.

Some examples of such scandals are:

Renewable energy firm China EnerSave, a subsidiary defaulted on the repayment of bank loans of 898.8 million yuan ($131.6 million) in China and the company has also defaulted on a loan repayment of $20 million.
Earlier, Chinese-based education provider Oriental Century , partly owned by Singapore’s Raffles Education “substantially inflated” the company’s balance sheet for its 2008 full year financial results.
Along with Oriental Century, shares in FibreChem Technologies and China Sun Bio-Chem are suspended from trading over alleged accounting irregularities.