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Loss of Harbin project due to inability to raise funds, funds misuse: YuuZoo
SOCIAL media company YuuZoo Networks Group (YNG) on Thursday said that the contract it had signed for the Nordic Sport Town project in Harbin, China has been lost as a result of YuuZoo's inability to raise funds, due to the continued share trading suspension and the misuse of company funds by a former employee.
In December 2017, YuuZoo announced that it had signed a framework agreement with Chinese state-owned Harbin Water Investment Group, which manages and controls all water-linked land in Harbin, China.
Under the framework agreement, YuuZoo agreed to develop an 85 hectare-large river-fronting area in Harbin.
In May 2018, YuuZoo signed an agreement for an investment of US$5 million into a fully-owned subsidiary to be set up to manage the project in Harbin, which the agreement valued at US$300 million.
In a follow-up agreement signed in June 2018 between YuuZoo and Harbin Water Investment Group, further details of the development project were agreed upon.
On June 11, 2019, YuuZoo announced that it had agreed with the mayor of Harbin on a definitive timetable for the project.
It further announced that the money which the Inland Revenue Authority of Singapore (Iras) had seized last year has been returned after being held for more than one year, and that the funds would be used to pay salaries and expenses related to the project in Harbin.
"Most of the funds returned by Iras were however illegally diverted and used for other purposes by a former employee of YNG, which meant the scheduled payments in China could not be made," it said on Thursday.
"The Chinese partner had earlier expressed doubts about the ability of YuuZoo to live up to its commitments considering the continued share trading suspension imposed by SGX RegCo.
"When the illegal use of the funds returned by Iras prevented the company from making salary payments to its staff in China, the Chinese partner cancelled the agreement that it had signed with YNG."
Trading in YNG shares has been suspended since March 2018.