As reported earlier by Kannibu on the several active court cases among the substantial shareholders of Heveaboard Berhad, which are as follow :

Civil Appeal No. N-02(IM)(NCVC)-836-05/2015

Civil Appeal No. N-02(IM)(NCVC)-1143-07/2015

Civil Appeal No. N-02(NCVC)(A)-1425-09/2015 

between Dato' Loo Swee Chew, Liang Chong Wai and Sung Lee Timber Trading Sdn Bhd 

and 

Yong Kian Seng @ Yoong Tein Seng, Yoong Hau Chun, Tenson Holdings Sdn Bhd,  Firama Holdings Sdn Bhd and HeveaWood Industries Sdn Bhd 

and 

Seremban High Court Originating Summon No. 24NCVC-197-09/2014

The Informant has now further divulged that the crux of the matter which give rise to the disputes that are now before the Court of Appeal, was that the minority shareholders of Heveawood Industries Sdn. Bhd. were contemplating to wind-up and dissolve Heveawood Industries Sdn. Bhd. itself on the ground that they were oppressed as a minority shareholder. The strongest mooting points and arguements put forth include irregularities in its accounting, book keeping of secretarial documents and the management of company funds and affairs.

To get our bearing right, the majority shareholders of Heveawood Industries Sdn. Bhd. consists of the Yoong Family (52.51%), Dato' Loo Swee Chew (21.66%), Liang Chong Wai (15.83%) and Sung Lee Timber Trading Sdn. Bhd. (10.00%).

Before we look at some discrepancies in certain accounting documents, I would like to correct a vague but important fact as was said in Kannibu's article that "Words around the privileged inner corporate circle disclosed that in one occassion, drinking glasses were thrown in a Heveawood Industries shareholders meeting at their Company Secretary's office at Bangsar South and thugs behaving violent manner rampantly displayed. Yoong Hau Chun, the MD of Hevea was even threatened at a shattered glass' point to tone down his word by Dato' Loo Swee Cheong." 

If you read in one go, you maybe are of the opinion that it was Dato' Loo who had thrown the drinking glasses. As a matter of fact, it was Yoong Hau Chun, the MD of Heveaboard that was the one who throw the drinking glasses. Angers erupted and the ensuing act was that Dato' Loo picked up a piece of the shattered glasses and threatened Yoong Hau Chun to tone down, and shouted 目无尊长 to Yoong Hau Chun. A physical clashes nearly occur if not for the timely intervention by all those present.

Now let's get to some disturbing news about Hevea. And I promise you, this is not even an appetiser to begin with.........

This is how it all started.

Shortly after Hevea was listed, it went on a borrowing spree of some RM200 plus million in committed loans and debts. And only to find itself engulfed right in the eye of the US Subprime storm in 2008, saddling it with a huge debts to the tune of hundreds of million. And the shares price of Hevea once tanked to as low as 7 sen a share. Almost all of the substantial shareholders' Hevea shares were forced sold by OSK Securities.

In order to ride through this hardship, besides selling their personal properties and assets to meet the bankers and stockbrokers' demand for payment on a personal level, Hevea is also cash-strapped. And there are hundreds of mouth waiting to be fed in the now idling and redundant factories.

The shareholders of Heveawood Industries Sdn. Bhd. (as it is only an ultimate shareholdings entity to Heveaboard Berhad and still remained relatively clean in balance sheet) decided to gear itself up, in order the secure the much needed cash flow to sustain Hevea.

One of these financial life lines availed by Heveawood Industries Sdn. Bhd. to Heveaboard Berhad was that it will help pay off an euro-debt of € 890,000 by instalments,  which is owed by Heveaboard Berhad to one of its European machinery suppliers.

It was agreed among both Heveaboard Berhad and Heveawood Industries Sdn. Bhd. that once the financial situations of Heveaboard Berhad returns to normalcy, Heveaboard Berhad will not only repay this € 890,000 to Heveawood Industries Sdn. Bhd., but it will also pay an additional equivalent amount of € 890,000 to Heveawood Industries Sdn. Bhd. as a "reward or compensation" for throwing the much needed money-buoy to Heveaboard Berhad.

I have combed through all the prior years annual report of Heveaboard Berhad to find this "reward or compensation" but to no avail. However, it is said by some Heveawood Industries Sdn. Bhd shareholders that this € 890,000 "reward or compensation" is embodied in a covenant in the multiparties Settlement Agreement with Heveaboard's bankers and creditors when the latter sought for winding up protection in 2009.

One strict condition as stipulated in the said Settlement Agreement was that firstly, Heveawood Industries Sdn. Bhd cannot be paid this €890,000 unless all the bankers and creditors are fully paid under the said Settlement Agreement. And secondly, Heveaboard cannot start paying dividend to its shareholders (Heveawood Industries Sdn. Bhd. included) until and unless certain loan pay down ratios have been achieved.

If Heveaboard choose to pay this € 890,000 to Heveawood Industries Sdn. Bhd. nonetheless, then all outstanding sums due to the bankers and creditors became payable and are on demand immediately.

Now, two main and serious wrongdoing on the part of Heveaboard Berhad may have arise.

First, as you can see from Page 5 of Heveaboard Berhad's Annual Report 2013 below, Heveaboard reported an amount due to a related party (Heveawood Industries Sdn. Bhd. in this acse) of RM 2,296,000.00. This is in stark difference to Heveawood's own Annual Report 2013 claimed amount that is due from a related party (Heveaboard Berhad in this case) of RM 4,204,733.00. 

The peculiar thing here is both Heveaboard Berhad and Heveawood Industries Sdn. Bhd.'s substantial shareholders are essentially the same group of peoples ie Dato' Loo Swee Chew, Liang Chong Wai, Sung Lee Timber Trading Sdn Bhd, Yong Kian Seng @ Yoong Tein Seng, Yoong Hau Chun, Tenson Holdings Sdn Bhd and Firama Holdings Sdn Bhd.

So why the discrepancy in accounting?

I can only conclude that the accounting in Heveaboard Berhad may have been 'tweaked' to look better. (Let me throw you the bombshell in my next article HEVEA : Ingenuity Accounting (Bomb No. 2)  亿维雅之"超乎完美"会计 (第二炮) about this)

Second, why didn't Heveaboard Berhad make any accounting revelation that there is an amount of € 890,000 to be paid to Heveawood Industries Sdn. Bhd. according to the covenant, in addition to the RM 2,296,000 as reported?

Again, I can only conclude that it is a calculated effort by Heveaboard Berhad to shield it from public eyes that it actually owed an additional amount of € 890,000 (or RM 4,254,200 based on Euro rate of 4.78 on 8/1/2016). Nevertheless, they will still pay Heveawood Industries Sdn. Bhd. this amount, once all bankers and creditors have been fully paid under the Settlement Agreement of 2009.

And all shareholders of Heveaboard Berhad (beside the substantial shareholders themselves as they will be paid wholesomely) will eventually be 'robbed' of an amount of RM 4,254,200.00, along the way.

(Page 1) Heveawood Industries Sdn. Bhd. Annual Report 2013

(Page 2) Signed and declared true accounting by Heveawood Industries Sdn. Bhd.'s main directors.

(Page 3) wherein Heveawood Industries Sdn. Bhd. has booked the € 890,000 advance it extended to Heveaboard Berhad as an amount due by a related party, with the outstanding of RM 4,204,733.00 remaining unpaid in its book as at Dec 31, 2013.

(Page 4) Note 10 depicting the description of the unpaid amount by Heveaboard Berhad to Heveawood Industries Sdn. Bhd.

(Page 5) Contrary to Heveawood Industries Sdn. Bhd.'s Annual Report 2013, the amount due to a related party (Heveawood in this case) by Heveaboard Berhad was recorded as RM 2,296,000 and not RM 4,204,733

(Page 6) Note 19 of Heveaboard Berhad's Annual Report 2013 depicting the outstanding amount owed by Heveaboard Berhad to Heveawood Industries Sdn. Bhd.