FLOORING specialist Jason Holdings has suspended chief executive Jason Sim and operations director New Sze Wei over allegations of improper transactions.
Mr New on May 1 had tendered his resignation.
The company plans to find an interim chief executive. Singapore Exchange, citing concerns about the allegations, has invoked a rule that requires Jason to obtain approval from the market operator before making any key appointments.
Following an internal audit report that investigated events that took place in the first six months of 2015, a special committee of Jason directors appointed Ernst & Young to perform a review of the internal audit report.
Ernst & Young found that certain deposits and prepayments to other parties had been made by Jason's principal subsidiary, Jason Parquet Specialist (Singapore), using trust receipts obtained from banks without supporting underlying goods. Accounts receivable financing from different banks had also been obtained using progress claims with identical work descriptions and values at different times.
There was a lack of proper agreement and documentation on payments made by Jason Parquet to various overseas parties, and there were discrepancies between the physical quantity of inventory and accounting records, Ernst & Young found.
Jason Parquet also paid for instalments for a hire-purchase vehicle registered under Mr Sim's spouse, and when the vehicle was reported stolen in October 2014, the balance insurance proceeds were not returned to Jason Parquet after repayment of the outstanding hire-purchase amount.
Jason's board said it believes that the directors of Jason Parquet may have breached their fiduciary duties. Mr Sim may also have breached Companies Act requirements to disclose his interest in certain transactions.
Jason's sponsor, Canaccord Genuity Singapore, has also informed the company that it believes that both Catalist listing rules and the Code of Corporate Governance have been breached.