SMRT to tighten governance controls in JVs after liquidation of EVCo, arrest of top executives
These include closer financial monitoring, more disciplined borrowing and increased checks on key personnel appointments
AFTER the liquidation of an electric vehicle (EV) joint venture earlier this year, SMRT will implement stricter governance controls on joint ventures (JVs) where it is the majority shareholder, said its chairman Seah Moon Ming on Wednesday (Jul 31).
The JV’s top executives were arrested in late-2023 in connection with a police investigation, and the company eventually went into liquidation with debts of almost S$50 million.
Moving forward, stricter corporate governance requirements will be made part of shareholder agreements.
These include closer financial reporting, which could be as often as weekly or monthly, and “financial guardrails” to ensure “disciplined borrowing”.
There will be stricter checks on the curriculum vitae and background of potential new chief executive officers and chief financial officers.
There is also a new leadership manual to remind those in such roles of best governance practices, said SMRT group CEO Ngien Hoon Ping.
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He was responding to media queries during a briefing on the group’s annual review for its financial year ended Mar 31.
The changes come after the failure of SMRT’s EVCo. Registered in March 2022 as Strides DST, it was a JV between SMRT business arm Strides Holdings, which owned 60 per cent, and Dishangtie Green Technology (Hong Kong).
The firm’s business was leasing commercial EVs, along with maintenance and fleet management services. But its CEO Fuji Foo and CFO Janice Low were arrested in late-2023 in connection with a police investigation.
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As at March 2024, the company faced debts of almost S$50 million – with its largest creditor OCBC being owed S$47.6 million – and went into liquidation.
Seah said that SMRT became aware of the company’s impending failure when EVCo asked for an additional shareholder capital injection in October 2023.
EVCo had acquired far more vehicles than secured customers, had no real prospect of meeting sales targets, and borrowed excessively, with a debt-to-equity ratio of “more than 2:1”.
EVCo had planned to acquire a fleet of 1,000 EVs, but had exhausted its capital in doing so as it faced high interest charges, warehousing costs and vehicle depreciation.
With that, there was “no way for the company to be sustainable or profitable”, said Seah.
He declined to comment on whether the actions of Foo and Low contributed to the firm’s downfall, citing an ongoing police investigation.
SMRT decided on voluntary creditor liquidation and EVCo’s 529 commercial EVs were sold to Pan Pacific Leasing, along with existing leasing contracts.
The total loss to Strides Holdings was its shareholding value of S$6 million. EVCo staff with “the right values and skills were redeployed to other parts of SMRT”, said Seah.
According to sources familiar with the matter, most of EVCo’s staff were asked to leave and only a minority were redeployed to other roles within SMRT.
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