Published April 28, 2009

Probe findings to be out by end-May: NEL

By CHEW XIANG
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THE results of an investigation by Ernst & Young into alleged 'round tripping' deals involving NEL Group should be released by end-May, the company said yesterday in response to queries from the Singapore Exchange (SGX).

The company also defended its choice of three directors yesterday.

Ernst & Young was appointed special auditor in January to probe the transactions, allegedly part of 'round-tripping' deals with memory modules maker Advance Modules to fabricate sales and inflate profits of the latter.

In December last year, NEL's previous auditor KPMG sent a confidential report to the Minister of Finance.

SGX subsequently directed the company to appoint a special auditor to investigate the possibly illegal deals.

NEL said yesterday its newly constituted audit committee has extended 'full cooperation' to the investigators and that barring unforeseen circumstances and SGX clearance, the final report should be released by the end of next month.

The company also defended its choice of three directors - Ng Aik Kee, Quah Hoe Phang and Ong Tee Kein - who have been named in lawsuits or have been involved with Chin Foh a Malaysian-listed company previously fined and reprimanded by Bursa Malaysia.

NEL said Mr Quah assumed executive management of Chin Foh only in November 2005, after a quarterly financial report was due for submission, and just before the annual audited accounts were due.

Bursa Malaysia fined and reprimanded Chin Foh for late submissions of the two reports, but NEL said Mr Quah was not disqualified from acting as a director in Malaysia.

Mr Quah and Mr Ng also face lawsuits for alleged oppression, reportedly from a former managing director of Chin Foh, while Mr Ong has been named in two suits in Malaysia.

NEL said there have been no further developments on the suits and that 'the said lawsuits have not come to a stage that will disqualify them from acting as directors of the company'.

Chairman Mr Quah and executive director Mr Ng, with independent director Lee Chee Kheng were voted in in February at a tempestuous extraordinary general meeting at which three directors were booted off the board and KPMG was removed as external auditor.

CEO Choong Choo Leong left NEL earlier this month and resigned as a director.

He said the decision was not linked to 'recent developments' at the company. His duties have been taken over by Mr Ng and Mr Ong.

Trading in the stock is currently suspended.