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Tee International tightens internal control policies to ramp up corporate governance
MAINBOARD-LISTED Tee International on Sunday said that it has implemented a slew of measures to tighten internal control policies and raise its level of corporate governance.
This comes after Tee's former group chief executive Phua Chian Kin had earlier admitted to taking company funds to repay his own debts and satisfy margin calls between July 2018 and October last year.
In a regulatory filing on Sunday, Tee said its external investigator had found that cheques for the remittances were "signed without supporting documents, despite the presence of established policies and procedures in place". The remittances were made on the basis of verbal instructions and management override of internal controls, said Tee.
As part of the group's efforts to enhance policies relating to cheque signatories, the number of signatories required for approval of payments over S$50,000 has been increased from two to three since September 2019. The interim group chief executive officer and group chief financial officer (CFO) are prohibited from jointly approving payments; and the group CFO and financial controller are prohibited from jointly approving payments.
Tiered upper limits have also been established in the approval process which require, at separate tiers, executive committee or board approval, said Tee. The bank mandates will be reviewed on a half-yearly basis or when there is a change of signatories.
Tee said it is now in the process of removing current group CFO, Yeo Ai Mei, and its financial controller as authorised signatories for all payments by the group. Mr Phua has been removed as an authorised signatory since September 2019.
Since Nov 25, 2019, the group has also enhanced the reporting of Tee's related party (RP) / interested person (IP) transactions to prohibit payments to RP/IP which are not on the approved vendor list. All payments can only be made to valid and approved vendors with an ID set up in the accounting system. The approved vendor list is subject to half-yearly review by the procurement department, said Tee.
The group added that the finance team and authorised bank signatories will also continue to check and ensure that all payees, including payees who are RP/IP, have a valid vendor ID code before payment can be processed, approved and released.
The calculation and monitoring of the interested person transactions (IPT) thresholds by the finance department, and the list of RP/IP transactions, are now reviewed by Tee's internal auditors, Protiviti, before being submitted to the audit committee for review on a quarterly basis or when necessary, said Tee.
Moving forward, Protiviti will conduct tests on payments and IPT on a half-yearly basis in the current three-year internal audit plan.
To enhance corporate governance, Tee's internal audit function and enterprise risk management function have also been fully outsourced to Protiviti, while the group’s legal and compliance functions have been outsourced to its corporate service provider and legal advisers.
Tee said it has also revised its whistleblowing policy to ensure that any whistleblowing report made through email will be automatically directed to the audit committee.
The group will carry out mandatory training on its enhanced policies for all new employees and annual training or refresher courses on existing employees. An awareness campaign of its policies will also be implemented, to include townhall sessions, training sessions and display of information on bulletin boards, said Tee.
“We have put very stringent internal control policies and procedures in place to raise our overall level of corporate governance to higher standards. I wish to assure our business partners and financiers that it is business as usual at the operational level and that Tee will emerge from this incident stronger and better for it," said Eric Phua, interim group chief executive of Tee.
Shares of Tee last closed down 0.1 Singapore cent - or 3.6 per cent - to 2.7 cents on Friday.