SINGAPORE - Five directors of private education provider Raffles Education, including its chairman and chief executive Chew Hua Seng, were notified of their formal arrest and bail conditions on Monday (Feb 21), following investigations by the Monetary Authority of Singapore and Commercial Affairs Department (CAD).
Mr Chew and four other directors of Raffles Education and its subsidiaries - Mr Lim How Teck, Mr Joseph He Jun, Mr Ng Kwan Meng and Ms Doris Chung Gim Lian - were asked to attend the CAD’s offices to effect their formal arrests, the company announced in an exchange filing on Tuesday.
Each director was subsequently released on $30,000 bail. Under the bail conditions, the directors have to routinely assist with ongoing investigations.They may travel outside of Singapore if they have obtained clearance before doing so.
The investigations are related to an RM410 million ($133 million) loan extended by Affin Bank to the company’s subsidiaries - Raffles K12 and Raffles Iskandar - which manage schools in Malaysia.
Raffles Education and its subsidiaries had been served a lawsuit by Affin Bank for immediate repayment of the loan on May 27 last year, but only disclosed this publicly to shareholders two months later, on July 29, at the request of the Singapore Exchange (SGX).
This could amount to a potential offence under section 203 of the Securities and Futures Act, which states that an offence is deemed to have been committed if material information was not disclosed to shareholders when it occurred.
In its Tuesday filing, Raffles Education said the lawsuit is “unmeritorious” and noted that Affin Bank had filed notices to discontinue the actions under the writs on Aug 23, 2021.
So far, none of the directors has been charged for any offence and the arrests do not imply that there will be any further action taken against them in the future, the Tuesday filing said.
The five will continue to serve their roles within the company as investigations are ongoing, while operations and day-to-day management of the business are not expected to be impacted, the filing said.
In a Feb 18 response to SGX queries in relation to its latest financial results, Raffles Education disclosed that it still owes RM287.6 million to Affin Bank as at Dec 31, 2021, and that it is in discussions with the bank to restructure and repay the outstanding loans. The company is also in talks to refinance the loan with other banks.
It also noted that the pandemic has restricted its ability to recruit and retain students at its Raffles American Schools located in Iskandar, Malaysia, and Bangkok, Thailand, but that it was hopeful of a recovery in demand from students in kindergarten to 12th grade.
For the six months to Dec 31, 2021, Raffles Education reported revenues amounting to $53.2 million, which is up 10 per cent year-on-year. However, net profit after tax fell by 80 per cent to just $7.7 million.
Still, revenues have been on the decline even before the pandemic, and the company has in recent years relied on its investment properties to drive earnings.
Last year, the company made headlines when a public feud erupted between Mr Chew and billionaire Oei Hong Leong.
Then a substantial shareholder of Raffles Education, Mr Oei had called into question emoluments paid to its directors, claiming higher salaries were paid to Mr Chew and his family members who worked at the company.
In its response, Raffles Education said there was no basis to the billionaire’s allegations.
Nevertheless, in a series of transactions in October last year, Mr Oei cut his stake in Raffles Education to 0.78 per cent from over 10 per cent, sending its shares to a record low of 5.9 cents on Oct 26, 2021.
The shares closed at 6.9 cents on Tuesday, down 6.7 per cent.
Additional reporting by The Business Times.