Saturday , October 23 2021

Research reveals funds in the logistics company Xin Hwa taken for personal use


KUALA LUMPUR (June 11): External auditors investigating financial irregularities at Xin Hwa Holdings Bhd today revealed that the company's funds have been used to care for personal expenses in the past two years.

According to KPMG, which was appointed by the logistics company's board to conduct the investigation, three of the eight complaints have either been substantiated or have been substantiated.

The results of the review revealed that the payment of dividends from a subsidiary of Xin Hwa was paid to a third party instead of the registered shareholder.

"But the agreement was made to settle a personal debt and with instructions from the registered shareholder," KPMG said.

In addition, the company's funds were used to pay the personal expenses of executive directors, KPMG said. These payments were partially made based on the fees of the directors and the remaining payments were recognized as debts owed by the directors to the company that have already been paid.

There were also payments made on behalf of a substantial shareholder, which had since been fully paid by the substantial shareholder, he added.

KPMG reported that the review was conducted mainly for the period from January 2017 to December 2018. The report was submitted to the audit and risk management committee and to the board.

In the course of its review, KPMG also noted that there were provisions for financial assistance from a subsidiary of Xin Hwa to various companies – in the form of advances and interest-free payments, mainly related to the operating expenses of these companies – although some of the advances and payments had been paid.

The auditors also pointed out that the review of the compensation of executive officers was not delivered to the Compensation Committee (CR) and to the board, as required by the Compensation Policy and Procedure of the company's directors. The matter had already been raised by the CoR and the Council.

"There was a variation between the bonus approved and paid in a year for a director of a subsidiary," KPMG said.

Xin Hwa's board said it is in the process of appointing solicitors to review the KPMG report and advise the board of any non-compliance with any law and listing requirements.

According to Xin Hwa's 2018 report, the company has three major shareholders – Eng Peng Lam @ Ng Peng Lam, Ng Aik Chuan and Ng Yam Pin – who are 71.87% considered interested because of the participation in the NF Capital Management Sdn Bhd in June 2018.

Aik Chuan, managing director of Xin Hwa, is the older brother of executive director Yam Pin. The duo, who co-founded Xin Hwa and was nominated for the council in 2013, is the daughter of Eng Peng Lam @ Ng Peng Lam.

Shares in Xin Hwa were not traded today. The stock was last made at 75 sen per share last Friday (June 7), bringing a market capitalization of RM162 million.

Read too: Xin Hwa Names KPMG to Review

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