EC World Reit, AEM’s explanations for shocking internal control failings woefully inadequate
EC WORLD Real Estate Investment Trust (Reit) : BWCU 0% and AEM Holdings : AWX 0% made a couple of shocking disclosures concerning their assets in the past fortnight. But instead of arming investors with information to make reasoned decisions – as disclosures should – the announcements raised questions about the companies’ inadequate internal controls and communication.
EC World Asset Management, the Reit manager, announced on Jan 2 that the Reit’s sponsor, Forchn Holdings, had – without its knowledge and consent – taken out mortgages in November 2023 on three of the Reit’s seven properties for loans of 268.6 million yuan (S$50.3 million) to the sponsor.
The Reit’s manager appeared to have only learned about the “illegally procured” mortgages from its onshore security agent.
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