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Monday 25 January 2010
CAD probes ex-Dayen deputy exec chairman
Dayen Environmental’s former deputy executive chairman John Lee is being investigated by the Commercial Affairs Department (CAD) under the Securities and Futures Act - and is now out on bail of $30,000.
(SINGAPORE) Dayen Environmental’s former deputy executive chairman John Lee is being investigated by the Commercial Affairs Department (CAD) under the Securities and Futures Act - and is now out on bail of $30,000.
News of the probe was accompanied by a damning report which Dayen’s audit committee released on Saturday. This revealed serious financial mismanagement, flawed internal controls, lack of due diligence, slip-shod records and a slew of previously unannounced loss-making deals involving a now-bankrupt Malaysian businessman.
The company’s audit committee has suspended Mr. Lee from his duties with the company. It has also asked chief executive Alan Yau to go on leave until it has reviewed matters raised in the special audit report and ascertained that Mr. Yau is fit to carry on his duties.
The report from Ernst & Young Risk Advisory Services (EY) said that Dayen has incurred some $1.14 million in expenses and could be hit with a further potential financial loss of $7.6 million from failed projects or deals.
EY was appointed in April to look into several key deals at Dayen after the Singapore Exchange (SGX) reprimanded the company for breaching listing rules with its tardy announcements and annual general meeting. There has been little news of the water treatment group since, other than positive press for two memorandums of understanding (MOUs) worth $10 million signed last June. But serious corporate governance lapses have now surfaced with the CAD probe and auditors’ report.
EY’s report said Dayen’s failure to comply with SGX listing rules was but one of many issues pointing to ‘serious deficiencies and weaknesses in the company’s internal controls’.
Not only were announcements incomplete or late, some deals with negative financial impact went undisclosed. Many of these had not been tabled for board approval and were undertaken with no due diligence.
These issues all came to bear in EY’s review of Dayen’s disposal of a subsidiary, Dayen Water Environmental Shenyang (DWES). The special auditors found serious documentation inconsistencies - among them, contracts for two projects related to the disposal which were signed by CEO Mr. Yau in 2007, before he was an employee of the company.
The auditors also found fake agreements during their site visit to China, fabricated to withdraw US$2.8 million from DWES’s investment account though no work had been done. No accounting records were ever kept for DWES, the report said.
There were other murky transactions. Dayen entered into several MOUs for contracts worth between $6 million and $220 million each without the board’s prior approval. Four other contracts worth $3.8 million secured by the Singapore office in 2008 were not disclosed.
Mr. Lee’s unilateral decision to acquire more shares from Indonesian company PT ATPK Resources led to a $59,000 realised loss and unrealised losses of $5.9 million in FY2008. And the purchase of coal-mining rights from ATPK was plagued with payment irregularities too.
EY also uncovered dubious deals linked to Tan Sri Amin, a Malaysian businessman declared bankrupt in 2007, who had 25 legal cases against him with total claims of RM420 million (S$175 million) as at last July. He introduced many business deals to Dayen via Mr. Lee, including a property project in Albania and the acquisition and disposal of a shell company in Malaysia.
EY said it understands that the company’s management is currently addressing these serious lapses in corporate governance and internal controls.
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CAD probes ex-Dayen deputy exec chairman
By TEH SHI NING
18 January 2010
(SINGAPORE) Dayen Environmental’s former deputy executive chairman John Lee is being investigated by the Commercial Affairs Department (CAD) under the Securities and Futures Act - and is now out on bail of $30,000.
News of the probe was accompanied by a damning report which Dayen’s audit committee released on Saturday. This revealed serious financial mismanagement, flawed internal controls, lack of due diligence, slip-shod records and a slew of previously unannounced loss-making deals involving a now-bankrupt Malaysian businessman.
The company’s audit committee has suspended Mr. Lee from his duties with the company. It has also asked chief executive Alan Yau to go on leave until it has reviewed matters raised in the special audit report and ascertained that Mr. Yau is fit to carry on his duties.
The report from Ernst & Young Risk Advisory Services (EY) said that Dayen has incurred some $1.14 million in expenses and could be hit with a further potential financial loss of $7.6 million from failed projects or deals.
EY was appointed in April to look into several key deals at Dayen after the Singapore Exchange (SGX) reprimanded the company for breaching listing rules with its tardy announcements and annual general meeting. There has been little news of the water treatment group since, other than positive press for two memorandums of understanding (MOUs) worth $10 million signed last June. But serious corporate governance lapses have now surfaced with the CAD probe and auditors’ report.
EY’s report said Dayen’s failure to comply with SGX listing rules was but one of many issues pointing to ‘serious deficiencies and weaknesses in the company’s internal controls’.
Not only were announcements incomplete or late, some deals with negative financial impact went undisclosed. Many of these had not been tabled for board approval and were undertaken with no due diligence.
These issues all came to bear in EY’s review of Dayen’s disposal of a subsidiary, Dayen Water Environmental Shenyang (DWES). The special auditors found serious documentation inconsistencies - among them, contracts for two projects related to the disposal which were signed by CEO Mr. Yau in 2007, before he was an employee of the company.
The auditors also found fake agreements during their site visit to China, fabricated to withdraw US$2.8 million from DWES’s investment account though no work had been done. No accounting records were ever kept for DWES, the report said.
There were other murky transactions. Dayen entered into several MOUs for contracts worth between $6 million and $220 million each without the board’s prior approval. Four other contracts worth $3.8 million secured by the Singapore office in 2008 were not disclosed.
Mr. Lee’s unilateral decision to acquire more shares from Indonesian company PT ATPK Resources led to a $59,000 realised loss and unrealised losses of $5.9 million in FY2008. And the purchase of coal-mining rights from ATPK was plagued with payment irregularities too.
EY also uncovered dubious deals linked to Tan Sri Amin, a Malaysian businessman declared bankrupt in 2007, who had 25 legal cases against him with total claims of RM420 million (S$175 million) as at last July. He introduced many business deals to Dayen via Mr. Lee, including a property project in Albania and the acquisition and disposal of a shell company in Malaysia.
EY said it understands that the company’s management is currently addressing these serious lapses in corporate governance and internal controls.
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