SINGAPORE (Sept 26): Technology firm Trek 2000 International has confirmed that all the charges against chairman emeritus Tan Henry @ Henn Tan and three other former officers by the Commercial Affairs Department (CAD) are related to some of the matters highlighted in 2017 and 2018 by forensic auditors RSM Corporate Advisory.

In its last forensic review, RSM in April last year published a 297-page report detailing various suspicious transactions and potential breaches at the company going as far back as 2007. These included the unearthing of evidence of suspected round-tripping, fictitious sales transactions, and fabrication of sham documents.

See: Forensic auditors at Trek 2000 uncover evidence of round-tripping, sales of phantom products, lax stock-keeping and altered invoices

However, in a filing to SGX on Sept 26, Trek 200 stressed that the legal action is brought on the former management staff in their personal capacity, and not on the company nor its subsidiaries.

“We understand that the charges were due to non-compliance of corporate governance as a public listed company, and there were no financial misappropriation and embezzlement or any other matters of such nature arising out of the investigations,” the company added.

Singapore Exchange Regulation (SGX RegCo) on Sept 25 had queried Trek 2000, following media reports that Tan and three former executives – former chief financial officer Gurcharan Singh, former executive director Poo Teng Pin, and former division president Foo Kok Wah – had been slapped with charges by the CAD.

See: SGX RegCo queries Trek 2000 on CAD charges against founder Henn Tan, 3 other former officers

Credited as being the inventor of the ThumbDrive storage device, Tan was the founder of Trek 2000, and its former chief executive officer and chairman. He relinquished his posts in the company in May last year, and was appointed as a consultant and chairman emeritus.

Following RSM’s damning report, SGX RegCo in a notice of compliance in April 2018 had barred Tan, Singh, Poo and Foo from holding appointments as a director or executive officer in any Singapore-listed company for a period of three years. The market regulator also ordered Trek 2000 to undertake an independent review of the company’s internal controls and corporate governance practices.

See: SGX issues Trek 2000 notice of compliance, objects to appointments of Tan and Foo

Local media reported recently that Tan is facing a total of 15 charges for alleged offences stretching over more than a decade. These include charges of forgery for the purpose of cheating, falsification of accounts, cheating, and breach of disclosure obligations.

The 63-year-old is alleged to have falsified entries related to revenue and net profit in Trek 2000’s FY2015 financial statements as well as fabricated fictitious records of sales and purchases in 2013 and 2014. All four officers then allegedly conspired to hoodwink external auditors Ernst & Young into believing that the FY2015 financial statements were in order.

In 2013, Tan also induced E&Y to issue an unqualified opinion on Trek 2000’s FY2014 financial statements by allegedly forging invoices and delivery orders. These were used to deceive the auditors into believing that the financial statements were in regulatory compliance.

Between 2006 and 2011, Tan is said to have also conspired with Singh to fabricate entries pertaining to the group’s licensing income. Tan allegedly also “recklessly” failed to make immediate announcements on a total of 47 interested person transactions from 2010 to 2013.

For their parts in the alleged corporate governance lapses, Singh, Poo and Foo face 16, eight and three charges, respectively. The cases for all four former Trek 2000 officers will be mentioned on Nov 6.

See: What was purpose of shenanigans at Trek?

In its query on Sept 25, SGX RegCo instructed Trek 2000 to confirm whether the CAD charges are related to matters highlighted earlier by RSM. It also told the company to provide an update to shareholders on how the board has since addressed the internal control lapses in the group, as well as confirm that the financial impact of the matters involved in the CAD charges has been publicly disclosed.

In response to the queries, Trek 2000 on Sept 26 said it had appointed an external professional firm, Baker Tilly TFW, to undertake an independent review of the Company’s internal control and corporate governance practices following SGX RegCo’s notice of compliance in April last year. It added that Baker Tilly TFW is in the process of finalising the report, and will be sending the report to SGX “shortly”.

Besides the independent review, Trek 2000 said the board had also appointed Nexia TS to conduct an independent review of the key internal control of the operations, and that the company has since implemented the recommendations to counter the identified lapses.

The company noted that the financial impact of all matters that are subject to the charges had already been publicly disclosed and highlighted in the RSM reports, and added that it does not expect any further financial adjustments in its financial statements this year.

Shares in Trek closed 0.1 cent lower, or down 1.3%, at its lowest-ever level of 7.6 cents on Sept 26. The counter is currently trading more than 70% lower than its IPO price of 25.6 cents in May 2000 – the same year it unveiled its ThumbDrive storage device, which displaced the floppy disk.