SINGAPORE (Apr 8): By resigning en masse on Mar 20, it was the intention of the three former Camsing Healthcare independent directors (IDs) to force management to address critically important audit concerns, despite outstanding audit matters.
This was the explanation given by former IDs Lau Chin Hock Kenneth Raphael, Ong Wei Jin and Maurice Tan Huck Liang after Singapore Exchange Regulation (SGX RegCo) on March 29 issued the company a notice of compliance, asking the trio -- who made up the company’s previous audit committee -- to explain why they have decided to resign in force even though company’s latest audit has not been completed.
See: SGX orders Camsing Healthcare IDs to explain reasons behind resignation; calls for special audit
Among the suspicious transactions highlighted by its auditors, it was discovered in January that sales of health supplements by Camsing to an overseas customer called Global Biotech Medical Inc in prior years had been sent back to Camsing subsidiary Nature’s Farm on consignment basis, via another firm called I-Nitra Consulting Limited, to be sold in Nature’s Farm’s retail outlets.
The IDs also felt that management did not take corporate governance seriously as they had faced resistance whenever the latter was urged to take steps that would enhance corporate governance.
For instance, when the IDs in January found out that CEO Hua Min, on behalf of Nature’s Farm, had paid Global Biotech the full sum of HK$15.6 million ($2.8 million) shortly upon signing the agreement to buy 5,000 “brainwave detecting headbands” made by a company called BrainCo even before the first batch of goods was received.
Publicly available information also indicated that those BrainCo devices were being trialed in China and it was unclear whether they had commercial potential, said the IDs.
However, after months of attempting to get management to pay attention and resolve the various issues raised, the trio said they made very little headway. Camsing executive chairperson Lo Ching and executive director Liu Hui also did not attend two special board meetings set up to address the concerns brought up by the auditors.
In order to push them to pay attention and resolve the outstanding issues, the three IDs proceed to warn the executive directors on Mar 13 that we would resign if the issues are unresolved, but even that was still unsuccessful.
“We felt that the only way to compel the EDs to act was to resign en masse and to address our concerns in the resignation announcements,” said the three IDs in its Friday night filing, “We acknowledge that our decision to resign appeared to be a sudden decision which was triggered by an adverse audit finding. That was not the case,” they added.
With the benefit of hindsight however, the trio said they should have consulted SGX RegCo before resigning in force, and apologised for not having done so.
In its notice of compliance, SGX RegCo said it would make an assessment of each of the former independent directors’ suitability for appointment as director or executive officer, based on their responses.
