The chief executive and group operations director of timber flooring specialist Jason Holdings have been suspended following a special auditors' report into financial dealings at the company.
The group told the Singapore Exchange (SGX) yesterday that an Ernst & Young (EY) report highlighted potential breaches of fiduciary duties in the management and administration of a key operating unit, Jason Parquet Specialist (Singapore). These included Jason Parquet having paid the hire purchase instalments of a car registered in the name of the wife of chief executive Jason Sim. In addition, when the car was reported stolen in October 2014, the balance of the insurance proceeds were not returned to the subsidiary after repayment of the outstanding loan.
As a result of the report, a special committee has suspended Mr Sim from his position, although he remains a non-executive director of the company.
Mr Sim's brother-in-law, Mr New Sze Wei, who tendered his resignation on May 1, was also suspended as group operations director.
EY said in its report tabled on Tuesday that Jason Parquet had made certain deposits and prepayments to other parties using trust receipts obtained from banks without supporting underlying goods.
The firm had also obtained accounts receivable financing from different banks using progress claims with identical work descriptions and values at different times.
EY found that there was a lack of proper agreement and documentation on payments made by Jason Parquet to various overseas parties.
There were also discrepancies between the physical quantity of inventories and the records in the accounting system, and inadequate documentation to support the writing-off of inventories, while full physical stock counts were not conducted in recent years.
The special committee that appointed EY following an internal audit report for events that took place in the first six months of last year said it believes the directors of Jason Parquet may have breached their fiduciary duties.
It added that Mr Sim, in not disclosing his interest in certain transactions, may have breached requirements under the Companies Act.
Jason Holdings' Catalist sponsor, Canaccord Genuity Singapore, has told the company that it believes both Catalist listing rules and the Code of Corporate Governance have been breached. The special committee said it plans to find an interim chief executive.
The SGX has invoked a rule that requires Mr Sim to obtain approval from the bourse operator before making any key appointments.