Ire-Tex packaging production floor at its plant in Bukit Tengah Industrial Park
KUALA LUMPUR: Ire-Tex Corp Bhd said a police report has been filed against its director Kong Hon Kay on Wednesday for his failure to provide copies of financial records of its protective packaging materials unit in China.
Ire-Tex, which is in the midst of a boardroom tussle, told Bursa Malaysia that Kong, the legal representative of Suzhou Ire-Tex Sourcing Co Ltd, had allegedly failed to provide copies of the subsidiary’s financial records, which are kept outside of Malaysia, despite the board’s request to do so.
This is said to be a possible breach of Section 245 of the Companies Act, 2016, which states, among others, that accounting and other records of operations abroad must also be kept in Malaysia and be made available for the directors’ inspection at all times.
“The company and every officer who contravene Section 245 commit an offence, and shall, on convinction, be liable to a fine not exceeding RM500,000 or imprisonment for a term not exceeding three years or both,” Ire-Tex said.
The company has requested that the police investigate the matter.
Kong, 49, was previously Ire-Tex group executive director but was redesignated non-executive director in February this year.
According to Ire-Tex’s annual report, Suzhou Ire-Tex Sourcing temporarily ceased operation in the previous financial year ended Dec 31, 2016.
The recoverable amount of the company’s investment in Suzhou Ire-Tex Sourcing was said to be nil, estimated based on the value-in-use method, thus resulting in an impairment loss.
The latest police report followed a police report made by Ire-tex (M) Sdn Bhd, a subsidiary of Ire-tex Corp, on Thursday last week.
According to Ire-Tex’s announcement on the matter, a total sum of RM1.8mil was caused to be paid out of the funds of Ire-tex Malaysia between June 2015 and October 2016, and these payments were allegedly approved by Kong and group chief operating officer Christopher Purcell.
Ire-Tex said the duo had told a special review committee, formed by the board to review the profit leakages of the company, that the payments to OGL Asia Resources for “sales commission to specified persons known to senior management.”
The company said it had an existing sales team which already attended to customers and did not engage OGL to do any sales or marketing for it.
Ire-Tex also announced last week that Chin Wui Choong, one of the directors purportedly removed at the recent EGM, had in March made a police report concerning the removal of funds from the company in June and July 2014 which were not for any purpose of the company.
The company had received a letter dated May 11 from the police’s Commercial Crime Investigation Department informed that the police had called three witnesses to assist in the investigation while waiting for bank statements from the bank.
“The status of the case is under investigation where investigation is being conducted to prove the involvement of former director Tey Por Yee who resigned on Feb 25 and Future Rank Sdn Bhd,” Ire-Tex said.
A police report was also made last Thursday by Ire-Tex Corp in respect of a claim made by Kong in connection with an alleged police report.
“The company has requested that the police investigate this unauthorised withdrawal of funds from the company,” it said.
Two camps emerged in Ire-Tex following the emergence of Elite Cosmo Group Ltd as a substantial shareholder late last year. Elite Cosmo, which currently holds 16.27% in Ire-Tex, had called for an EGM to remove certain directors - Kong was not one of them - and appoint others to the board.
The outcome of the EGM, held on April 27, was disputed by at least one of the directors who were removed, and the case has been taken to court.
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