Special audit on Cedar uncovers numerous lapses

Singapore

CHINESE real estate firm Cedar Strategic Holdings has displayed numerous weaknesses and/or lapses in corporate governance, internal controls, and possible non-compliance with the Catalist board rules, according to a special auditor report by Baker Tilly Consultancy. The issues highlighted by the special auditor include unrecovered receivables of 180 million yuan (S$39.9 million) from the divestment of the titanium dioxide business, the acquisition and proposed divestment of Trechance Group, the acquisition and divestment of Yess Le Green and West Thames, the acquisition of Futura, severance payments and disbursements. On the company's acquisition and proposed divestment of Trechance, for instance, the special auditor was unable to locate board minutes that demonstrate that the board had deliberated the acquisition of Trechance.

It also noted that while Cedar and TCI (Talented Creation International) entered into a second supplemental agreement to revise the terms of the Trechance acquisition in August 2014, the management had paid S$752,095.94 of the S$900,039 cash consideration to Ji Yu Dong in January 2014 before the board's approval of the second supplemental agreement. In September 2014, Cedar went on to pay S$210,000 of the cash consideration to Sinowealth Capital Limited (SWC) instead of TCI. The auditor noted that the company was unable to locate any written instructions from TCI for the payment of S$210,000 to SWC in September, and was further unable to locate any confirmation from TCI that Cedar was no longer liable for this tranche.