Midas board flags suspicion over signing of loan guarantee papers

Directors at troubled railway parts maker Midas Holdings have raised questions over the way an alleged board resolution used to provide liability guarantees for 400 million yuan (S$82.3 million) in loans was signed.

The debt-laden Chinese company, which is embroiled in financial scandals and management disputes, is facing civil suits filed by a Chinese moneylender, Jilin Provincial Micro Refinancing Corporation.

At a June 26 court hearing, it was found that the loan guarantee document was sealed with a rubber seal meant for parcel deliveries and not with the company's common seal, the Midas board said in a regulatory filing yesterday.

Its common seal is kept in Singapore and is meant to be used on important documents.

Midas directors Chan Soo Sen and Tong Din Eu abstained from voting on the loan guarantee resolution.

But Midas said in the filing that they were not informed there was a board meeting on the matter.

"Both Mr Chan and Mr Tong were absent at the signing and no effort to ratify the resolution was made," it stated.

It is also unclear whether former chief executive Patrick Chew signed the board resolution.

There were photos submitted as evidence that Mr Chew had signed certain documents.

However, the board noted that the signature is in Chinese and not Mr Chew's usual signature.

"If Mr Chew did sign the board resolution, it will contradict his earlier denial about his ignorance of the underlying loans related to the guarantee," the board stated.

"If Mr Chew did not sign the board resolution, then forgery may have occurred."

The board declared in May that Midas cannot operate as a going concern, while its auditors said separately that its reports for the firm from 2012 to 2016 can no longer be relied upon.

Trading in Midas shares remains suspended.

A version of this article appeared in the print edition of The Straits Times on July 05, 2018, with the headline 'Midas board flags suspicion over signing of loan guarantee papers'. Print Edition | Subscribe