Wednesday 11 April 2012

Xian Leng: "boxes of cash"

In my previous article about Xian Leng I was rather worried about the pretty vague and indecisive announcement made by Xian Leng to Bursa Malaysia. Most likely Bursa was not happy at all about how things were proceeding, held a meeting with members of the Board of Directors of Xian Leng, upon which the following announcement was made. This is already much more concrete than the previous announcement, with a clear list of preemptive and corrective actions that will be considered and (hopefully) undertaken.

It is good that Bursa Malaysia chases the Board of Directors, although the Managing Director, his wife and Chua Chong Seng have resigned, the Managing Director is still the majority shareholder.

An article in The Star of today reveals more fishy matters:

What puzzled those who have read the auditor's report would be Chua's seemingly cavalier attitude to money. In two interviews with the auditors, he said boxes of cash were left in the office on Ng's instructions to pay the four contractors.

Chua claims not to know what happened to the cash after it was passed over to two employees in the accounts department which, according to Ng, should have been passed to the relevant contractors.

The auditors noted that although payment vouchers for the contractors were signed and receipt of payment have purportedly been acknowledged, neither Ng, Lim or Chua as well as Xian Leng's accounts personnel could confirm the identity of the persons who signed on the payment vouchers.

Furthermore, the circumstances surrounding the four contractors' getting the projects for the development of the fish farms seems fishy. The auditors said there were no written contracts entered into with the contractors, who only issued invoices stating the work done in broad terms.

They said no tenders or competitive bids were called before the four contractors were appointed since there was no such company policy while Ng said he was the only one involved in engaging the contractors due to the sensitivity and security surrounding the arowana breedstock.

Checks with the Companies Commission of Malaysia by the auditors showed that the contractors were all registered as sole proprietorships with three of the contractors issuing invoices after their business registrations had expired with no subsequent renewal.

The auditors have not been able to contact the contractors, one of which has passed away while the whereabouts of two others were unknown. Another has been hospitalised while one Abdul Razak, said to be the main contractor who brought the other contractors to work on the fish farms, have not been contactable.

A troubling sign which the auditors noted was that a “finance manual” adopted by the company in January 2003 listing down policies and procedures was never tabled to the board nor the audit committee.

Besides this, the external and internal auditors of Xian Leng did not inform the board nor the audit committee of the issuance of cash cheques.

1 comment:

  1. Can anyone explain why at the first place the security commision approved for this company to be public listed ?