KUALA LUMPUR: Scomi Energy Bhd’s has formed a committee to investigate certain related party transactions (RPT) and advances made without prior authorisation pertaining to the transactions.
“As the investigation is still ongoing, the board is unable to provide a statement as to whether the provision of the advances were fair and reasonable or to the detriment of the company or its shareholders,” Scomi Energy said in a filing with Bursa Malaysia Friday.
Scomi Energy said it had determined that the company has omitted to announce certain RPT in accordance with the Main Market Listing Requirements.
These RPTs relate to sums that have been advanced to its holding company, Scomi Group Bhd and its subsidiaries (Scomi Group of Companies) over a period of two years from June 2016 to June 2018 (the affected period).
Given the nature of shareholding between the company and Scomi Group and the common directors between these two listed entities, these advances are deemed to be related party transactions.
“The total sum advanced is RM64.33mil of which RM19.39mil relate to a shared service agreement between the company and Scomi Group and is not regarded as a related party transaction pursuant to Paragraph 10.08(11)(k) of the MMLR.
“The balance of RM44.94mil (the advances) constitutes related party transactions, of which the Scomi Group of Companies has, over the affected period, repaid RM9.7mil,” Scomi Energy said.
During the affected period, the Scomi Energy’s board believed that the amount due from Scomi Group Bhd related to the shared service agreement between the company and Scomi Group.
“Upon being informed that the advances had been made without prior authorisation from the board, the board immediately commenced an investigation into the matter to obtain further information relating to the advances,” Scomi Energy said.
Scomi Energy’s board has engaged a firm of solicitors to conduct a review of the transactions pursuant to which a preliminary report has been issued.
“Arising from the preliminary report from the solicitors in November 2018, the board is initiating an investigative review of the transactions constituting the advances to be conducted by a third party firm of independent auditors who will be tasked to undertake a complete inquiry to identify issues and risks that arise, pursuant to which the board will take steps to implement additional protocols to further strengthen corporate governance and enhance management accountability and transparency.
“In addition, the scope of the investigative review is to determine the culpability of person(s) responsible for the making of the advances,” it said.
In the meanwhile, Scomi Energy the board has undertaken some improvement and remedial actions such as revieweing the management structure and terminating shared services agreement between the company and Scomi Group.
It is also reviewing the reporting and escalation structure from management to the board, and ensuring that the chief financial officer is directly accountable to the board to report on all material matters, including any proposed related party transactions.