Sen Yue in CAD probe; chairman suspended from executive functions

CATALIST-LISTED Sen Yue Holdings has been ordered by the Commercial Affairs Department (CAD) on Wednesday to produce certain documents and information for the financial years ended Sept 30, 2015 to 2020.

This is in relation to offences under the Penal Code (Cap 224) and the Securities and Futures Act (Cap 289) according to the Criminal Procedure Code, the waste-management group said in a bourse filing.

The move came after Sen Yue chief executive and executive director Neo Gim Kiong, and audit committee chairman Chim Suan Kit Mark filed a report with the CAD on Jan 5 over matters highlighted in a recent independent review.

The review, conducted by Foo Kon Tan Advisory Services (FKT), supposedly found that customers of Sen Yue's wholly-owned subsidiary SMC Industrial (SMCI) had ties to executive chairman Koh Mia Seng.

SMCI provides industrial waste solutions in Asia, with a niche in electronic-waste management and recycling solutions.

The FKT report noted certain non-disclosure of interested person transactions. The accounting firm recommended the company lodge a report with the appropriate authorities and request said authorities to carry out a full investigation.

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FKT said there are reasons to believe there are certain fraudulent and/or fictitious transactions, as well as a high risk that some transactions between SMCI and certain companies may be fraudulent and/or fictitious. There is also evidence that criminal offences may have been committed, FKT said.

Mr Koh was suspended from all executive functions on Jan 8 and redesignated as non-executive chairman on Jan 13. Mr Neo has taken on Mr Koh's duties and responsibilities in the group.

The group's nominating committee considered Mr Koh's responses to the FKT report findings unsatisfactory. Hence, it believes Mr Koh is not suitable to remain as a director of the company and its subsidiaries as the report findings "put into question his character and integrity", Sen Yue said.

Mr Koh and certain SMCI staff - Koh Wen An and Priscilla Loh - are still being interviewed by CAD officers as at Wednesday. Sen Yue has not been informed by these parties if there were any formal charges or arrests, whether or not their passports have been impounded and whether or not there were any restrictions or conditions imposed by the CAD.

The group said it intends to fully cooperate with the CAD to assist in the investigation. Its nominating committee is also consulting with bourse watchdog Singapore Exchange Regulation about removing Mr Koh from the board.

"While the CAD investigation has no direct impact on the group's operations in light of Mr Koh's redesignation to non-executive chairman, the group still faces challenges in its business operations arising from the amounts due and outstanding to SMCI's creditors," Sen Yue said.

It added that its board is preparing an update to shareholders about the report findings and an executive summary of the FKT report and Mr Koh's responses. It will release a further announcement on the matter.

Separately on Thursday, Sen Yue said SMCI received a letter of demand from DBS’s lawyers on Wednesday. 

The letter noted that events of default have occurred under the various banking facilities granted by the bank to SMCI. DBS has recalled these banking facilities. 

SMCI owes DBS around S$5.9 million and has about US$9 million outstanding, plus all accrued interest and legal costs on an indemnity basis. The bank has demanded these sums be paid within three weeks or SMCI will be liable to be compulsorily wound up. 

Sen Yue said it is in discussions with DBS on suitable repayment proposals and the company will update shareholders as and when further material developments occur.

In October last year, SP PowerAssets sent a second letter of demand to SMCI to pay an aggregate balance outstanding sum of close to S$7.5 million and any accrued interest for late payment of this amount. 

Sen Yue called for a trading halt in end-April 2020, before converting it to a suspension in May. Its shares last traded at 2.2 Singapore cents on April 27.(see Amendment note)

Amendment note: A previous version of the story stated the trading suspension date as April 28 when it was in fact in May 2020.