PERAK-BASED lingerie manufacturer Caely Holdings Bhd is in a peculiar situation after the investigation by its forensic auditor Virdos Lima Consultancy (M) Sdn Bhd into allegations of suspicious and irregular transactions within the company has stalled following the unavailability of key information.
This latest findings by Virdos Lima is one of the few of issues besieging Caely which is also embroiled in a boardroom tussle and continuous freeze of its bank accounts at the instruction of the Malaysian Anti-Corruption Commission (MACC) (since April 20).
In a Bursa Malaysia filing yesterday (June 13), Caely said Virdos Lima has informed the company that it could not continue with its investigation as certain required key information was either incomplete or not available in a satisfactory form.
The key information which are crucial for the forensic auditor to conclude its investigation are:
- Various complex and unusual accounting entries that were entered into the company’s wholly owned subsidiary Caely (M) Sdn Bhd’s (CMSB) accounting general ledger that are required to be traced, checked and verified against supporting documents;
- For various financial periods, key documents such as – but not limited – to invoices, payment vouchers, receipts and agreements could not be located;
- Various company electronic devices that were assigned to key suspects had been removed and/or could not be located at the company’s premises. These electronic devices may contain key electronic stored information such as –but not limited to – e-mail communications, documents, spreadsheets and presentations.
- It is unsure at this juncture if Caely has lodged a police report following the latest findings by Virdos Lima.
Virdos Lima’s appointment came about in early April after one of Caely’s independent non-executive directors received an anonymous package containing documents that raised concerns about several suspicious transactions involving CMSB. The investigation was initially scheduled to be completed by May 31.
Earlier, Caely’s external auditor PKF Malaysia had issued a qualified opinion on the group’s audited financial statements for its financial year ended March 31, 2020 in relation to CMSB’s ability to recover certain receivables.
The auditor noted that CMSB had trade receivables of close to RM12 mil as of March 31, 2020 related to construction works for Felcra Bhd which were completed on Feb 28, 2018.
However, only RM250,000 in repayment had been received by the company since completing the works which it attributed to the change of government and the COVID-19 pandemic.
As all payments for the construction have been delayed, PKF is of the view that with the prolonged delay, the carrying amount of trade receivables might be impaired due to uncertainty over the recoverable amount.
On May 18, three of Caely’s shareholders who collectively held at least 10% of the company called for an extraordinary general meeting (EGM) to discuss various issues, including the removal of its newly appointed executive chairman Wong Siaw Puie and six other existing directors.
This follows the initiation of a legal suit by the company’s founder and non-executive director Datin Fong Nyok Yoon against the company and six current and former directors to prevent them from issuing new shares through a private placement exercise.
The EGM is slated to be held on tomorrow (June 15).
At the close of yesterday’s trading, Caely was unchanged at 38 sen with 78,000 shares traded, thus valuing the company at RM98 mil. – June 14, 2022
