SINGAPORE (June 20): Midas Holdings said it has uncovered up to nine cases of irregularities involving nearly RMB 1 billion ($210 million) its Dalian subsidiary in China.

The irregularities involved undisclosed loans, guarantee agreements and fund transfers to secret accounts and companies implicating its former top executives.

And the troubled train parts manufacturer warned that the financial impact of the irregularities uncovered may widen as the directors await additional bank statements, loan statements and loan documents.

Midas likely to go bust if creditors push for liquidation; board aims to salvage parent company

How Midas ended up being a train wreck

CAD launches investigations into Midas

The board announced these in a Wednesday night filing after they made a visit to its China subsidiary Dalian Huicheng Aluminium Co. (DLHC) as part of their investigations.

Midas says trying to ascertain cash balance; promises to hold dialogue by end April

Among the irregularities uncovered were an undisclosed RMB 300 million loan from China Citic Bank entered into on April 2015 which was not recorded in the DLHC’s financial records.

Yang Xiao Guang, the former legal representative of DLHC at various times, also did not report the loans to the board.

Another was a RMB 256 million loan in the form of debt restructuring agreement for the Citic bank loan which was entered on Sept 22 for a period of 36 months and at an annual interest rate of 8%.

Yang, along with former executive Ma Ming Zhang and former chairman Chen Wei Ping did not report to the board about the loan. Ma and Chen were specifically censured by Singapore Exchange in a Notice of Compliance issued on April 2.

Midas says former exec chairman Chen Wei Ping under probe in China for fraud

SGX strips Midas chairman Chen and legal representative Ma of their appointments

Midas' former executive chairman Chen refutes board allegations he refused to answer questions

On Dec 15, 2015, DLHC also entered a guarantee agreement with China Citic Bank, Chongqing Branch, for a RMB50 million loan to Chongqing Huicheng Aluminium Co (CQHC).

Yang and DLHC seals were sighted in this guarantee agreement.

During the course of investigation, the directors also uncovered a series transactions in the month of December 2016 in an undisclosed Bank of China (BOC) account which was opened by DLHC’s former financial controller Ma Zhong Mei who retired in February this year.

The transactions showed fund inflows and outflows of RMB 152.4 million each way which were recorded in the bank statements but omitted in DLHC’s general ledger.

From the bank statements, the directors also found that DLHC had entered into a RMB150 million loan agreement with BOC on March 10 2016 for a period of 8 months which was not disclosed to the board.

Again, Yang and DLHC seals were sighted in the BOC loan agreement.

The board also found that Midas received only RMB18.48 million it was supposed to receive from the sale of DLHC’s stake in CQHC to Lesen Capital, now known as Lakeforest Capital, for RMB229.5 million in cash consideration.

Lesen Capital is owned by Chen Chen, nephew of Chen Wei Ping.

The remaining RMB 211 million was in fact transferred to another the bank account of another company which is 99% owned by Ma Jin Sheng and whose former legal representative and largest shareholder was none other than Ma Ming Zhang.