YuuZoo: A ghost trapped in suspension

AFTER almost a year of ongoing investigation by the Commercial Affairs Department (CAD), YuuZoo Networks Group Corp has thrown in the towel in Singapore and ceased operations here.

The social commerce company has remained defiant throughout its decline, and on Monday YuuZoo sought again to cast blame for its troubles on other parties. Even as the end looms ever nearer for YuuZoo, one gets the sense that the company just doesn't get it.

After The Business Times discovered that YuuZoo had quietly vacated its Teletech Park office in Singapore without settling its rent, and that chief executive Mohandas had resigned after he was not paid for three months, the company on Monday revealed that it had shut down all of its Singapore operations.

In an announcement on Monday, YuuZoo sought to blame a number of parties for its Singapore departure.

The Singapore Exchange (SGX), it said, was responsible for imposing a trading suspension on YuuZoo's since March 2018 after auditor RT LLP failed to give an opinion on financial statements for the year ended Dec 31, 2017.

On that front, RT was blamed for not giving an opinion on questions by SGX, and SGX got double-dipped in the blame jar for refusing to accept YuuZoo's response instead and keeping the trading suspension in place.

The CAD, which investigates white-collar crimes in Singapore, earned a rebuke for taking nearly a year to investigate and, to date, without revealing any wrongdoing.

The Internal Revenue Authority of Singapore (IRAS) also took flak for seizing YuuZoo's cash as part of its investigation, then returning that money in a cheque after IRAS did not find any owed taxes, YuuZoo said.

Finally, the company alleged that Singapore banks refused to let it open a bank account, making it impossible for YuuZoo to access the money returned by IRAS and to raise new funds.

For all the blame that YuuZoo had to sling around, none of it landed on the company itself or the key personnel who were running the company when it began its decline.

The company continues to make questionable decisions. On Monday, YuuZoo announced the appointment of Su Chu Keat, 43, as an independent director and audit committee chairman.

YuuZoo disclosed that Mr Su was an audit partner at RT LLP from 2012 to 2018, but did not mention that RT was also YuuZoo's auditor for fiscal 2016 and 2017. RT gave a clean audit opinion for YuuZoo's 2016 accounts, but withheld its opinion for FY2017, and subsequently resigned.

Given that CAD's investigation into YuuZoo covers 2016, Mr Su's ability to remain independent amid the probe is something that YuuZoo needs to address.

Notwithstanding YuuZoo's actions, investigators can perhaps do a better job on some fronts.

Associate Professor Mak Yuen Teen of NUS Business School, an avid governance expert who has been highlighting failings in YuuZoo over the years, agreed with the trading suspension of YuuZoo, but said that SGX and CAD should have stepped in earlier: "The speed of enforcement is an issue, and justice delayed is justice denied. This company has had issues for years, which if investigated in time could have prevented what we are seeing now."

CAD should perhaps also be more willing to provide updates on ongoing investigations, given the weight that an ongoing probe can have on business as usual.

The latest developments at YuuZoo add another sad chapter for YuuZoo shareholders who have watched the company's shares plunge from around S$0.50 to S$0.038 just before suspension. Those shareholders need a better explanation, from both the company and from the investigators.

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