Dufu directors, only a fine and reprimand? (2)

Dufu did indeed announce the reprimands and fines. At least the investors in Dufu know what happened.

Interesting article from Errol Oh in The Star regarding the same matter:

"It’s not mystery meat. It’s Dufu"

Some snippets:

Lee Hui Ta, who’s also known as Li Hui Ta, was was reprimanded and fined RM150,000 because he approved the payment vouchers for those remittances to the US. In other words, he helped Yong commit the offence. Li was then Dufu’s executive director and chief financial officer (CFO).

.....

Where there should be a sweet ending to the meal, we instead get a strange aftertaste. Despite Li’s part in facilitating the remittances to the US, the Dufu board didn’t ask him to leave.

Not only does he carry on as an executive director and CFO, but on June 18 last year, he was appointed the executive chairman to replace Hsu Chin-Shui, who had failed to secure re-election during the company’s AGM the same day.

That means Li is in a highly unusual position of being responsible for the financial management of Dufu as well as heading its board of directors.

......

There’s another awkward element in Dufu’s governance that should be addressed. A CFO typically reports to the CEO, but how does this work if the CFO is also the board chairman?

The Edge Malaysia in its issue of October 3, 2016 also paid attention to the same matter under the header "Paltry punishment":

"RM 200,000 is a mere 5% of the amount involved. So, does the punishment fit the crime?"

Dufu directors, only a fine and reprimand?

Article from the Securities Commission:

Yong Poh Yow, former Executive Director and Chief Executive Officer of Dufu, was found to have made remittances totalling US$1,010,041 to foreign parties in the United States between January 2013 and October 2014 without authorisation from Dufu’s Board. The monies were then used to purchase several assets which were registered under his own name. This is a breach of section 317A(1) of the Capital Markets and Services Act 2007 (CMSA).  He was reprimanded and fined RM200,000.

Lee Hui Ta, also known as Li Hui Ta, former Executive Director and Chief Financial Officer of Dufu, was reprimanded and fined RM150,000 for abetting Yong by approving payment vouchers for the said unauthorised remittances. Lee is currently the Executive Chairman of Dufu.

While a breach of section 317A(1) of the CMSA carries upon conviction, a minimum imprisonment term of two years up to a maximum of 10 years and a fine not exceeding RM10 million, the SC had imposed administrative sanctions on both Lee and Yong after taking into consideration that Yong had fully repaid the amount of US$1,010,041 to Dufu.


The punishment looks extremely mild, is this really a proper deterrent? I strongly doubt it.

The company has not yet published the above on the announcement's website of Bursa, surely this is material information for investors in Dufu.

Announcements: Tanjung, Dufu, Sasbadi, China Stationary

Tanjung Offshore announced:

"We refer to our previous announcements on 8 January 2015, 5 February 2015 and 6 February 2015. Tanjung Offshore Berhad (“Tanjung” or “Company”) wishes to announce that it has on 11 February 2015, lodged a Police Report against two directors, Tan Sri Tan Kean Soon (“Tan”) and Muhammad Sabri bin Ab Ghani who have been suspended from their executive positions following the findings of the Company’s Independent Committee. 

We also refer to the following articles: “Tan Kean Soon breaks silence over allegations at Tg Offshore”, published by Bernama on February 9, 2015; and “Tan Kean Soon declares he is blameless over Tanjung Offshore issue”. 

In reference to Tan’s allegations in these articles, the Company would like to state that Tan was given ample opportunity to present his concerns before the Independent Committee. However, Tan declined to attend interviews with the Independent Committee, or to make any statement to the Committee despite several reminders to attend the interviews. When the Board of Directors (“Board”) of Tanjung formed the Independent Committee at the meeting of 8 January 2015, Tan had agreed to and consented to it. The Board also agreed to his request to include Tan's personal legal advisor as an ex officio member of the Independent Committee. Tan’s personal legal adviser attended only the initial two (2) meetings out of daily meetings conducted by the Independent Committee over a two (2) week period."

This in relation to statements like "I am certainly blameless", as made by Tan in an article in The Star. Time will tell if that is correct.


Dufu announced:

The Board of Directors of DUFU (“the Board”) wishes to announce that it had on February 4, 2015 received an allegation letter against certain Senior Management of the Group on misappropriation of the Company’s fund of approximately RM3.9 million. Further to the emergency Board of Directors’ Meeting held on February 9, 2015 to address such allegation, the Board still unable to ascertain the factuality of such allegation for the time being. In consequent thereto, the Board has set up an Independent Committee (IC), comprising 3 Independent Directors of DUFU to coordinate and oversee the investigation process of the case. The composition of the IC are as follows:-

Chairman: Mr. Ong Choon Heng;
Members: Mr. Khoo Lay Tatt and Mr. Ang Siak Keng.

The IC has been authorized to perform the following duties at its sole discretion:-

• To appoint an Investigation Auditors to investigate on the remittance of fund to U.S. during the year of 2013;
• To request the existing Auditors of the Group (Messrs. Crowe Horwath) to investigate on the remittance of fund to U.S. during the year of 2014;
• To investigate on the potential related party transactions.

KiniBiz wrote about Sasbadi, a company that only listed half a year ago:

"Law En Ruey, the chief operating officer of recently listed book publisher Sasbadi Holdings Bhd, has moved to retire from his post at the ripe old age of 30, according to an announcement on Bursa Malaysia."


When one invest in a stock one bets on the horse (read: company), but also the jockey (read: the management team). An important change has occurred so soon after a listing, which is rather remarkable.


China Stationary announced its 4th quarter results, a selection of some red flags:

• Revenue has fallen hugely this quarter to only RM 36M
• But PPE (Property, Plant & Equipment) is strangely up a lot, about RM 80M
• However, depreciation is down
• Loss over the year before tax is RM 216M
• Trade & Other Receivables is up to RM 200M, strange in relation to the low revenue
• Selling and Distribution expenses fallen from RM 34M to only RM 1M
• Cash is down almost RM 300M
• But interest received is hugely up, from RM 4M to RM 29M

Next to that, losses due to the fire, late delivery and 10% deviation in reported earnings:

The cash flow statement is also puzzling, despite the losses and spending on PPE the cash as measured in RM went actually up because of RM 455M due to the exchange rate? The Chinese Renminbi did indeed change somewhat relative to the Ringgit, but not that much.