nTan Corporate Advisory appointed independent investigator, adviser
By LYNETTE KHOO
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(SINGAPORE) FibreChem Technologies said yesterday that Ernst & Young could not finalise an audit of its trade receivables and cash balances for the year ended Dec 31, 2008.
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| Mr Zhang: Has resigned from his positions of executive chairman and CEO with immediate effect and offered to cooperate fully with the board |
The company has appointed nTan Corporate Advisory as an independent investigator and financial adviser to look into the matter and advise on measures to keep the business going.
FibreChem executive chairman and CEO James Zhang has resigned from his positions with immediate effect and offered to cooperate fully with the board.
The company made the disclosures in a filing with the Singapore Exchange (SGX) and sought a suspension of trading in its shares.
'The company takes a serious view of these recent developments,' FibreChem said. It gave no details on the auditor's disagreement on the balance sheet figures and any involvement by Mr Zhang.
BT understands that no police report has been made so far, and neither has the external auditor written to the Minister of Finance.
Market fears that problems with FibreChem's accounts caused a delay in the release of its full-year financial results, scheduled on Monday, sent the stock plunging in heavy trading that day, prompting a query from SGX.
Nicky Tan, CEO and founder of nTan Corporate Advisory, told BT that his firm's investigation is at an early stage. 'The immediate focus will be on trade receivables, bank balances and business continuity,' he said.
A team from nTan is now in Xiamen, China to secure FibreChem's books and records to get an understanding of the issues and establish the facts.
Mr Tan said that it is too early to say how long the investigation will take.
FibreChem said that it has set up an independent working committee, comprising non-executive directors Ong Tiong Seng, Chong Weng Chiew, Lim Chin Tong and Tan Sin Mui, to oversee the investigation and business continuity.
The group's executive vice-chairman, Xu Xu Hui, will be acting CEO for now.
Ernst & Young was appointed FibreChem's external auditor at a special general meeting in September last year to replace Deloitte & Touche, not too long after the latter was reappointed the company's auditor on April 29, 2008.
'We have not been informed of the reasons for FibreChem's decision to appoint another firm as external auditor,' Cheung Pui Yuen, audit partner at Deloitte Singapore, told BT.
He said that Deloitte was FibreChem's external auditor for the year ended Dec 31, 2007 but has not been engaged to carry out any audit work on the company since then.
Ernst & Young declined to comment, citing client confidentiality reasons.
Based on FibreChem's unaudited financial statement for the nine months ended Sept 30, 2008, the company had negative trade receivables of HK$53.69 million (S$10.5 million), a turnaround from positive trade receivables of HK$57.36 million in the first nine months of 2007.
Its cash and cash equivalents at Sept 30, 2008 were HK$1.17 billion, double the HK$597.46 million a year earlier.
DBS Vickers analyst Ho Pei Hwa, whose last call on FibreChem's stock was a 'hold', said that the issue has cast a pall over accountability and corporate governance at S-chips.
'This will affect the sentiment on S-chips for a while, especially now the (broader) market is also not doing very well,' she said.
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