SCOMI ENERGY SERVICES BHD
KLSE (MYR): SCOMIES (7045)
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Posted by chinaman > 2019-11-03 15:32 | Report Abuse
KUALA LUMPUR (Jan 11): Scomi Energy Services Bhd’s (SESB) board has commenced an investigation into the RM64.33 million lent to its parent company Scomi Group Bhd as the advances were made without board approval, according to the filing to Bursa Malaysia.
The advances without board approval have dragged SESB into deeper financial trouble as Scomi Group, which holds a 65.64% stake in SESB, has not been able to repay the outstanding amount.
The board said that it is currently reviewing the management structure and terminating the shared services arrangement between itself and the parent company, except for certain critical functions.
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“Arising from the preliminary report from the solicitors in November 2018, the board is initiating an investigative review of the transactions constituting the advances to be conducted by a third party firm of independent auditors,” said SESB in the filing.
The money lent was for two-year period from June 2016 till June 2018.
Shah Hakim Shahzanim Zain was then the chief executive officer of both Scomi Group and SESB until August 2018 and March 2018 respectively. He was succeeded at SESB by Hilmy Zaini Zainal, who had held various senior management positions within the group since 2001.
Meanwhile, the chief financial officer (CFO) of SESB during most of the affected period, namely Chacko Kunjuvaru, had been appointed CFO of Scomi Group in March 2018.
Other notable directors who sat on the board of both companies while the transactions occurred were non-independent non-executive director Lee Chun Fai, independent non-executive director Tan Sri Nik Mohamed Nik Yaacob, who resigned from both boards on July 19, 2018 and independent non-executive director Liew Willip.
As of today, Sammy Tse Kwok Fai is an executive director of both companies, SESB said.
The major shareholders of Scomi Group are IJM Corp Bhd holding 24.37%, Kaspadu Sdn Bhd 8.91% and Amadia Investment Ltd 7.9%. Kaspadu is Shah Hakim’s vehicle.
The group said that it has been in constant negotiation with Scomi Group to pursue the repayment of total sum advanced.
“Subsequent to the affected period, Scomi Group has made repayment of RM6.8 million. However, there is a risk that the cash flow of the company and the financial ability of the company to meet its financial obligations will be affected in the event Scomi Group is not able to settle the advances.
“In such event, the company is considering all options available to it to ensure recovery of the advances,” SESB said.
The advances had also been made without prior approval by the Audit Committee, which is still unable to provide a statement as to whether the provisions were fair and reasonable or to the detriment of the company and its shareholders, SESB said.
“The board believed that the amount due from Scomi Group related to the shared service agreement between (SESB) and (the parent group,” it said.
The advances had been disclosed in SESB’s audited financial statements for the financial years ended March 31, 2017 (FY17) and FY18. It was stated as amounts due from ultimate holding company, SESB added.
SESB is also reviewing the reporting and escalation structure from management to the board, and ensuring that the chief financial officer is directly accountable to the board to report on all material matters, including any proposed related party transactions.