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Raffles Infrastructure special audit hits snag with 'lack of cooperation' from Chinese unit
SPECIAL auditors appointed by Raffles Infrastructure Holdings flagged a "lack of cooperation" by the firm's Chinese unit, as the team investigates the critical compensation claims of 804 million yuan (S$159 million) in total to three customers of Raffles Infrastructure in its former iteration as China Fibretech.
China Fibretech was an S-chip that had its shares suspended after the three customers claimed that the products supplied by China Fibretech were defective and sought compensation - with their claims being far larger than the value of the products supplied.
With its attempt at a new beginning, Raffles Infrastructure has shed the fabric business, and as its new name suggests, is venturing into infrastructure. But resumption of trading of shares in Raffles Infrastructure rests in part on the completion of the special audit, which began on Oct 1. The audit is expected to take about six months to complete, The Business Times reported in October.
The audit process now appears to have hit a snag. Special auditors from KPMG had requested for information from the Chinese subsidiary, Sinwa Knitting & Dyeing, and was told by Raffles Infrastructure that the team could start on fieldwork. However, the team was not afforded "effective cooperation" by the China subsidiary when it arrived in Quanzhou, Raffles Infrastructure said on Friday.
The company said that a certain "Mr Wu" was away during the time; and his personal assistant, a "Mr Zhang", was not able to help the team.
"The KPMG team was, consequently, not able to complete the tasks it had set out to complete during that trip," the company said. The special auditors did observe on a tour of the production facilities that production was ongoing with 20 to 30 staff working in the factory.
"In view of the lack of cooperation by the China subsidiary, the company is working closely with its appointed professionals to ensure that the special audit is completed on time, and all outstanding issues are resolved effectively with the assistance of these professionals."
The BT report in October also said that Raffles Infrastructure plans to work with China state-owned enterprises on infrastructure projects. Raffles Infrastructure has already started on projects and partnerships, signing a tripartite agreement on Sept 10 with China Railway Construction Corporation's 23 Bureau Group and Tianfu Railtech Valley to jointly bid for infrastructure projects.