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Eneco Energy appoints independent investigator regarding missing payment of S$3.88m

Eneco Energy, formerly known as Ramba Energy, on Monday appointed an independent external reviewer to investigate the circumstances around a payment made by a subsidiary of the company to an Indonesian broker.

The identity of the independent investigator and the scope of the investigation will be decided by the company’s audit committee to be announced at a later date.

Eneco Energy was informed of the payment issue by its independent auditors Ernst & Young in the course of its audit investigations.

Ramba Energy West Jambi Ltd (REWJ), a wholly owned subsidiary, was required to furnish a bank guarantee to the concession holder in order to secure the extension of the exploratory permit for the concession. During the financial year, a director (who is an unnamed substantial shareholder of the company) withdrew S$3.88 million from another subsidiary company’s bank account, and the director and management represented that the funds were then advanced to a broker to secure a bank guarantee from its bank in favour of REWJ.

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The auditors are of the opinion that documents provided by the director concerned and management to show that the withdrawal of the funds was for the purpose of making the queried payment, were inconsistent with information obtained by the auditors from the broker’s bank that issued the proforma bank guarantee and also from the concession holder.

The queried payment was recorded as an amount due from a broker and subsequently a full impairment allowance of S$3.88 million was made against the amount due, after queries were raised about its recoverability. Due to the inconsistencies mentioned above, the auditors were unable to ascertain the commercial rationale of this arrangement, and the nature, existence and recoverability of the amount.

The auditors have advised the audit committee and the board that an investigation should be conducted.