Tee International ex-CEO borrowed funds for personal use; SGX to look into potential breaches of listing rules

PWC noted that the Singapore Exchange Rules and the Companies Act may have been breached due to former group chief executive Phua Chian Kin's actions. PHOTO: ST FILE

SINGAPORE (THE BUSINESS TIMES) - Mainboard-listed Tee International has released its external investigator summary, which reported that former group chief executive Phua Chian Kin had admitted to taking company funds to repay his own debts and satisfy margin calls.

PricewaterhouseCoopers Risk Services, in a 13-page executive summary released by Tee on Tuesday (March 3), set out how remittances were made in and out of the company's coffers under Mr Phua's instructions. The chief financial officer of the group at that time, Yeo Ai Mei, executed this majority shareholder's orders between July 2018 and October last year.

PwC noted that the Singapore Exchange (SGX) Rules and the Companies Act may have been breached due to Mr Phua's actions including interest party transactions (IPTs) and an inaccurate announcement. It commented that furthermore, there was a breakdown of Tee's internal controls of payment processes.

SGX's regulatory arm in a statement later on Tuesday said it "will be carefully reviewing PwC's report as well as other matters to do with the company for potential breaches of the listing rules".

SGX RegCo said the exchange expects listed companies to have in place appropriate internal controls to monitor material disbursements of its funds. They and their directors must also ensure that procedures are in place to monitor IPTs for compliance with the listing rules, SGX added.

Last year, independent auditors Deloitte & Touche noted during their audit of Tee International that the group had paid $3.75 million to Mr Phua and Oscar Investment, an offshore company he controls.

Mr Phua was relieved of his CEO duties last September but remains a director.

According to the PwC report, Tee's subsidiary PBT Engineering received $2.8 million from Oscar on July 19, 2018 purportedly to be used as a fixed deposit to secure a facility line with a bank for the operations of the group. PBT later repaid Oscar the amount via a cheque, which was cleared on July 24 but the payment voucher was only issued three weeks after the funds transfer - under Ms Yeo's instructions.

Tee's unit Trans Equatorial Engineering transferred $500,000 to Mr Phua's personal account on Feb 12 last year, which was jointly approved by Mr Phua and Ms Yeo. The latter said that there was a request from Mr Phua for the purposes of a "corporate exercise".

However, Tee's internal auditors were told a different story in October by Mr Phua, who admitted that $165,000 of the funds were used to repay his loan from a moneylender while the remaining $335,000 were purportedly used to satisfy margin calls from stock brokers.

Trans and PBT transferred $1 million and $2 million respectively in March last year to Oscar. Ms Yeo told PwC that Mr Phua had requested the funds for a "corporate exercise", so she instructed the treasury to perform the transfers.

The audit committee was told in July last year by Mr Phua that the $3 million was to qualify the group for a project in Cambodia. However, the internal auditors were told - also by Mr Phua - that he had used $251,478 of the $3 million for partial repayment of a $1.5 million personal loan while $2.5 million was used in two repayments for a loan taken by Oscar from a third party.

PwC noted that the loan that Oscar had taken out was a back-to-back loan arrangement Mr Phua had with Tee's majority-owned listed unit, Tee Land, for the funding of a project.

Mr Phua told PwC that he thought it was "appropriate" for him to request monetary aid from the group when he was in financial difficulties, and that he had the intention of repaying the loan to Tee within the same month. He further claimed that his pride had resulted in contradictory statement given to different parties, as he "did not want the audit committee to know he was in need of cash". He had furnished loans to the group periodically in the past when it was in financial needs, whereas he was the one in need of money this time.

Mr Phua and Oscar have repaid all sums to Tee, as at August last year.

In its statement, Tee said it is reviewing the findings of PwC and will address the matters raised, with updates to be provided on the steps taken and to be taken.

It had ordered Ms Yeo to leave last week due to her involvement in certain unauthorised payments.

With additional information from The Straits Times

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