SGX weighs in on governance worries at YuuZoo

Singapore

THE unusual tit-for-tat between Professor Mak Yuen Teen and Singapore- listed YuuZoo that has been playing out for more than two weeks over governance-related concerns at the social media and e-commerce company appears to have caught the Singapore Exchange's attention.

The Business Times understands that the stock market's frontline regulator has weighed in on the matter and now wants a say in the company's choice of an independent third party that will be tasked with investigating certain claims and statements raised about the company including allegations by its former financial controller.

When contacted by The Business Times, SGX confirmed that it was in touch with YuuZoo over the matter.

"SGX has been in contact with YuuZoo on the selection of an independent third party to review the claims and statements as mentioned in the company's announcement . . . and the terms of reference of the review," said the exchange.

In non-regulatory parlance, SGX is looking to ensure the independence and terms of references of the review.

This follows a July 17 announcement by YuuZoo of its plans to, among other things, appoint an independent third party, as suggested by its executive chairman and founder Thomas Zilliacus, to investigate and "put an end to further speculation and misleading public claims".

The party conducting the audit will report its findings and recommendations to YuuZoo's lead independent director (ID) Anthony Williams, the company added.

YuuZoo said this in reference to six articles that appeared in BT between May 4 and July 11 - three of which were penned by corporate governance advocate Prof Mak of NUS Business School - and claims made in public and privately by its former financial controller Thai Youn Fatt who left the company in May on evidently not very good terms.

Prof Mak, who last week posted a nine-page point-by-point rebuttal on his website, Governance for Stakeholders, to YuuZoo's latest statement on the third-party review which referred to some of the claims by the academic as "inaccurate or misleading", agreed that the SGX should have a say in the matter.

He added that the independent third party should report to the audit committee of all independent directors and not just to the lead ID who is based in the United States.

Prof Mak also called for the identity of the reviewer to be disclosed and for the full report to be made available to SGX, other regulators and shareholders.

BT's queries to Mr Zilliacus on the matter did not draw any response.

In previous articles that appeared in BT, Prof Mak had flagged the string of departures - at least 15 directors and key officers including chief financial officers and two audit committee chairmen - at the company since its listing in September 2014.

Other concerns raised included the "churn in external auditor" and issues related to the company's disclosure and accounting methods.

YuuZoo had shot back at Prof Mak's queries, saying that it did not comprehend the rationale behind the article, which was followed by another salvo by the latter in an article titled "YuuZoo riddled with contradictions".

The sparring continued and last week culminated in YuuZoo's latest announcement about the independent review.

"I have been a keen observer of corporate governance in Singapore and internationally for almost twenty years but I have never seen a company quite like YuuZoo," Prof Mak remarked in his latest posting dated July 21.

All this has also taken a toll on YuuZoo's stock which closed at a low of 5.8 Singapore cents on Thursday - down some 30 per cent since July 5 when Prof Mak's first article was published.

The very public engagement between the company and a well-respected governance advocate is rare in corporate Singapore and appears to have drawn a following.

"Providers of capital ought to have as much transparency to make informed decisions. Prof Mak is helping to make the ground level by highlighting the shortfalls in disclosure and governance. If it takes a toll on the share price, it's merely a by-product of management's failure to address this," said a market observer.