Directors Of LFE Corporation Being Fined And Publicly Reprimanded By Bursa Malaysia
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.
- Bursa Saham Reprimands LFE Corp
- Bursa fines and publicly reprimanded MEMS TECHNOLOGY
- Accounting Fraud Updates: Liqua Health Corporation Bhd
- MEMS TECHNOLOGY being directed by SC To Rectify Its Financial Statements
- Performance of Companies Listed in Bursa Saham Malaysia from 2007 to July 2009
- ACCOUNTING FRAUD UPDATE: MEMS TECHNOLOGY BHD (MEMS)
- Accounting Fraud Updates: Megan Media Holdings Berhad
August 18, 2009
Tags: ACCOUNTING FRAUD IN MALAYSIA
Posted in: ACCOUNTING FRAUD/SCANDALS, Malaysia & Asia Pacific
Leave a Reply