Fu Yu provides updates on probe into its supply chain arm
Investigations clarify that the unit’s US$3 million payment to a third party was made for trades that were conducted on its behalf
[SINGAPORE] Fu Yu Corporation has confirmed that its unit’s US$3 million payment to a third party, that has been the subject of a probe, was made for services that were rendered.
In February, investigations into the affairs of its subsidiary Fu Yu Supply Chain Solutions (FYSCS) revealed that the unit made unverifiable arrangements concerning a payment of around US$3 million, for which services did not appear to have been received.
In a Monday (Sep 1) update on an ongoing probe into FYSCS’ activities, parent company Fu Yu Corp said that investigations have confirmed that the services underlying its unit’s payment to KWW Consultancy were rendered.
These services were trades executed by KWW Consultancy on FYSCS’ behalf, that the unit profited from. KWW Consultancy is a company owned by Wong Ka Wing, a FYSCS employee. Wong and KWW Consultancy’s director Tan Xin Yi are friends with Victor Lim – Fu Yu Corp’s largest shareholder who is involved in the probe.
The two parties entered an agreement in July 2022, whereby KWW Consultancy agreed to make trades on FYSCS’ behalf.
The investigation further revealed that the payment was made to a third-party entity, Arc International Energy, which appears unrelated to either party.
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KWW Consultancy had assigned Arc International Energy to receive the payment through a deed of assignment and indemnity deed dated Nov 9, 2022, but the investigations were “unable to conclusively state what the commercial rationale” of this arrangement was.
Alleged misuse of resources and e-mail
Other matters raised in the probe, such as the potential misuse of FYSCS’ resources and an e-mail account, were also addressed in the findings.
Regarding the matter of the unauthorised use of an e-mail by third parties, the investigations revealed that Lim’s girlfriend Hazel Cai had used it to source for and negotiate deals on behalf of FYSCS.
This was done on a purported “goodwill basis” and Cai was not found to have been paid, the findings noted.
Lim and Cai are among the six individuals that Fu Yu said it was pursuing claims against, over the probe.
Other employees also had access to the e-mail account.
The investigation could not ascertain if reimbursement claims Lim made during his tenure as FYSCS’ director of strategy were solely for the unit’s benefit.
These claims totalled S$9,427.76.
The investigation found that some expenses were incurred with persons who did not have commercial ties to FYSCS at the time they were recorded.
However, it could not rule out the possibility that these were prospective clients or suppliers, as the company does not keep records of its prospects.
Acquisition of FYSCS
Concerns about Lim’s alleged influence over Fu Yu Corp’s decision to acquire FYSCS was another matter raised under the probe.
These concerns arose as some employers of the supply chain unit – which was called Avantgarde Enterprise before Fu Yu acquired it – were formerly staff at Aeturnum Energy International, a company that Lim used to be the managing director of.
The investigation found “no basis to determine that (Fu Yu’s) board (at the time) was misled or improperly influenced in causing the company to enter the FYSCS acquisition”.
Lim’s involvement in the acquisition “appears to have ended when a board memorandum dated May 24, 2021, was presented to the then board”, it said.
The board was assisted by legal and financial due diligence conducted by independent professionals, the investigation added.
Board dispute
The probe’s findings come to light in the wake of a board dispute within Fu Yu Corp.
Three former independent directors of the company resigned in June amid repeated attempts by Lim to oust two of them.
Lim had called for an extraordinary general meeting (EGM) on Jan 9, to remove Royston Tan and Christopher Huang from Fu Yu’s board, citing the need for a “strategic reset” of the company amid what he described as its poor performance.
After this attempt failed, Lim reiterated his call for an EGM to vote on ousting Tan and Huang on Feb 5.
On Mar 11, Lim made a third request to table resolutions to oust Tan and Huang at Fu Yu’s upcoming annual general meeting, set to take place on Jun 27. The company agreed to Lim’s request.
On Jun 15, Fu Yu announced that Tan, Huang and a third director Daniel Poh, had resigned.
Shares of Fu Yu ended on Tuesday 1.9 per cent or S$0.002 higher at S$0.105.
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