Sakae sheds no further light on case of sugar trade turned sour

Singapore

HOW Sakae Holdings lost US$4.3 million (S$5.93 million) selling sugar to a disappearing customer remains a mystery, with the boss of the conveyor-belt sushi brand giving little away when pressed by shareholders at Sakae's annual general meeting (AGM) on Monday.

About 30 people attended the AGM held at the Sakae Building, where the board was asked who initiated the sugar deal, who the delinquent customer was, and why Sakae had ventured into sugar trading in the first place.

Executive chairman Douglas Foo was tight-lipped under questioning. The case is being investigated by the police, he noted.

"When there is an investigation going on, I don't think we are at liberty to discuss it," he said.

Besides, all the facts have been published in Sakae's announcements in September, Mr Foo added.

This did not satisfy some shareholders who asked why Sakae's independent directors, who formed its audit committee, had not raised the alarm sooner.

The sugar sale had been invoiced in December last year and remained unpaid for months before Deloitte, Sakae's auditor, flagged the issue to the board on Aug 27.

Mr Foo replied: "Do you want to do the corporate governance part, or do you want to recover it (the money)? We were working very hard to recover it. We were on top of it, but we wanted to recover it. Because once you recover it, it is not an issue right? So as far as we were concerned, the recovery was more important."

Lead independent director Chan Wing Leong added: "The auditors discovered it (the sugar problem) around the time they were working to finish up the final results, and the audit committee was informed... Auditors must do their job, we are not there to check the accounts.

"It's very clear that the independent directors were made privy to this fact (of the unpaid sugar) only in August."

Mr Chan was the only independent director who attended the AGM. Lim Chee Yong has retired effective Monday, while Nandakumar Ponniya Servai has resigned to focus on professional and personal commitments after taking on a regional role at work. Both were absent at Monday's meeting as they were overseas.

Despite the tough questions, the hour-long AGM was civil, although one shareholder urged Mr Foo to focus on his core food business, voicing concerns that management had gotten "distracted" over the years.

Mr Foo said: "I beg your pardon, if you have mistaken us for a food company. We have never gone out to say we're building a food company. We have always said we are building a global brand."

Sakae has always been on a "brand-building journey", he said: "So you realise that even when we do fintech, it's Sakae Fintech. Even when we do corporate advisory, it's Sakae Corporate Advisory. We go to blockchain, it's Sakae Blockchain. We do cybersecurity, it's Sakae Cybersecurity. It's all riding on the Sakae brand."

He added: "We are trying to build a McDonald's or a Starbucks for sushi. So we are not a F&B company."

Asked by The Business Times after the session how the sugar business was meant to help Sakae build its brand, chief executive Lilian Foo, Mr Foo's younger sister, said she would not be able to say more than what had been disclosed during the AGM.

The shareholder who had urged Mr Foo to return his focus to the food business called the AGM "disappointing". Sakae had only just emerged from a six-year-long legal battle over a property investment that turned sour.

While the issues raised remained as cloudy as a cup of Japanese sencha, all resolutions were passed at the AGM. Mr Foo has a direct and deemed interest in 65.91 per cent of Sakae Holdings. Sakae shares last changed hands at S$0.18 on Oct 15.