Sakae non-exec director asked to resign

SINGAPORE - Two weeks after external auditors of Sakae Holdings Ltd flagged financial irregularities at an associate firm, Andy Ong Siew Kwee, a non-executive director of Sakae, which owns the Sakae Sushi chain, has been asked to resign from its board. In a filing with the Singapore Exchange last night, Sakae revealed that Mr Ong, who managed Griffin Real Estate Investment Holdings, had been identified as the person responsible for "various undisclosed irregular financial transactions . . . undertaken in (Griffin)" that may be in breach of the Companies Act.

The board has asked Mr Ong to tender his resignation within seven days from Feb 1. If it does not receive his resignation in 14 days, it will convene an extraordinary general meeting to remove him from his position, Sakae said.

Mr Ong could not be reached for comment.

Sakae said in an earlier statement that the suspicious transactions were also in breach of a Sept 3, 2010, subscription and joint-venture agreement, and "may adversely affect (Sakae's) interests and the value of its investments" in the company.

An international accounting firm commissioned by Sakae executive chairman and CEO Douglas Foo Peow Yong to investigate Griffin's accounting records reported that the suspicious transactions included payments of substantial sums that have been made by Griffin and "apparent contracts which purport to oblige (Griffin) to make substantial payments to companies majority-owned or controlled by Mr Ong".

Sakae said that these transactions had not been properly disclosed to Sakae and Mr Foo, who is also the company's representative on Griffin's board. "As a director of the company, Andy Ong has both statutory and fiduciary duties that require him not to act against the interests of the company, and/or not to place himself in a conflict of interest position."

In recommending Mr Ong's resignation, Sakae's nominating committee, which includes Mr Foo, cited the findings of the accounting firm's report, a written complaint filed by Sakae's lawyers to the Commercial Affairs Department, as well as a confidential report on Griffin that had earlier been submitted to the Minister of Finance.

Under Section 207(9A) of the Companies Act, an auditor of a public company or a subsidiary of a public company, has a legal duty to report to the Minister of Finance immediately if he has reason to believe that a serious offence involving fraud or other dishonesty has been committed against the company by officers or employees of the company.

Sakae said that it believed that Mr Ong should not be permitted to be present at board meetings or be privy to discussions and decisions by the board regarding the ongoing investigations and other confidential matters concerning Griffin and him.

Mr Ong is also chief executive officer of ERC Holdings, which runs various businesses in education, training and property investments. According to ERC's website, he is a sought-after financial authority and had appeared frequently on CNBC, Bloomberg and Channel News Asia to speak on financial management issues.

 Irregularities at Sakae associate firm flagged

Tues, Jan 22, 2013

SINGAPORE - Just three days after external auditors of Kingsmen Creatives flagged financial irregularities involving its subsidiary, another company, Griffin Real Estate Investment Holdings, an associate firm of Sakae Holdings Ltd which owns the Sakae Sushi chain, is in the spotlight for possible violations of the Singapore Companies Act.

In a filing to the Singapore Exchange yesterday, Sakae disclosed that a confidential report on Griffin Real Estate had been submitted to the Minister of Finance.

Under Section 207(9A) of the Companies Act, an auditor of a public company or a subsidiary of a public company, has a legal duty to report to the Minister of Finance immediately if he has reason to believe that a serious offence involving fraud or other dishonesty has been committed against the company by officers or employees of the company.

Public records show that Aric Loh, a partner with Deloitte & Touche, is the audit partner of Sakae. Deloitte & Touche is also the external auditor of Griffin Real Estate.

When contacted, Mr Loh declined to comment, citing confidentiality issues.

Concerns over several transactions undertaken by Griffin Real Estate came to the notice of Douglas Foo Peow Yong, Sakae's executive chairman and chief executive, prompting him to commission an inspection of Griffin's accounting records and a report from an international accounting firm, according to the filing.

Sakae holds a 24.69 per cent equity stake in the real estate investment company. Sakae and other companies, including a company owned by a non-executive director of Sakae, are parties to a subscription and joint-venture agreement with Griffin Real Estate dated Sept 3, 2010.

Andy Ong Siew Kwee appears to be the controlling shareholder of Griffin Real Estate, according to a Sept 3, 2010 announcement by Sakae. His controlling stake in Griffin Real Estate appears to be held through various companies.

Mr Ong is also a non-executive director of Sakae and CEO of ERC Holdings. According to ERC's website, he is a sought-after financial authority and appears frequently on CNBC, Bloomberg and Channel News Asia to speak on financial management issues.

Sakae said the accountants' report stated that various financial transactions undertaken in Griffin Real Estate "may appear to be irregular and in breach of the Singapore Companies Act (Cap 50)".

According to Sakae, the suspicious transactions may also be in breach of the Sept 3, 2010 subscription and joint venture agreement, and "may also adversely affect (Sakae's) interests and the value of its investments" in the company.

Sakae invested $4 million and $2.64 million in Griffin Real Estate in January 2011 and June 2012 respectively.

According to the filing, the suspicious transactions include payments of substantial sums of monies that have been made by Griffin Real Estate.

They also include "apparent contracts which purport to oblige (Griffin Real Estate) to make substantial payments to companies related to senior management of (Griffin Real Estate) that had not been properly disclosed to (Sakae) or to (Sakae's) representative in the board of (Griffin Real Estate) in breach of the (subscription and joint venture agreement.)"

Mr Ong did not return calls for comment.

After getting the accountants' report, Mr Foo immediately notified Sakae's audit committee and its external auditors. Sakae said its board, through its lawyers, had notified the Commercial Affairs Department.

The board said it will "take firm and decisive action against all relevant persons who may have acted against (Sakae's) interests, including commencing legal proceedings to recover any loss or damage (Sakae) suffered in connection with any irregularity in Griffin Real Estate".

Under Section 207 (9A), a "serious offence involving fraud or dishonesty" refers to an offence that is punishable by imprisonment for a term that is not less than two years; and the value of the property obtained or likely to be obtained from the commission of such an offence is not less than $20,000.

Accounting experts say this provision is seldom invoked by auditors as a normal audit is not designed to uncover fraud.