SINGAPORE (Sept 8): TEE International is appointing an external third party independent investigator to look into unauthorised payments totalling $6.55 million.

The remittances, made by TEE International's wholly owned units PBT Engineering and Trans Equatorial between July 2018 and March 8, were allegedly approved by Phua Chian Kin, the group CEO and managing director.

The board and executive committee were also reportedly unaware of these remittances, said TEE International in a Sunday night filing in response to queries by the Singapore Exchange.

All the money remitted have been fully repaid to the group as of Aug 29.

The unauthorised remittances were discovered by the group when it was preparing its financial statements for the full year ended May 31. External auditor Deloitte had raised a red flag when it was unable to verify the nature of the remittances amounting to $3 million which were recorded as "other receivables”.

Among the payments made, $2.8 million was paid out on July 19, 2018, by Oscar Investment, an investment holding company wholly owned by Phua, to PBT Engineering.

“Phua claimed that the funds were placed into a fixed deposit account to activate a banking credit line granted to PBT Engineering,” said TEE International.

Repayment was made on July 24, 2018.

In four other transactions on Feb 12, March 1, March 4 and March 8, $3.75 million were paid by either of the subsidiaries to Phua or Oscar Investment .

This time around, Phua claimed the money was used to pay for certain expenses to secure a relevant engineering project for the group, said TEE International.

“However, no supporting documents were provided by Phua to support the nature of these remittances, what the money was paid for, and to whom it was paid to,” added TEE International.

Since the discovery, Phua has been removed as an authorised signatory for all payments. Meanwhile, internal auditor Protiviti and the Business Control and Risk department of the group have widened the scope of review on key internal controls in selected areas, including the authorisation of payments made from the company's subsidiaries. The review started on Sept 2.

In addition, the audit committee has recommended that Phua recuse himself from his role as group chief executive and from voting on the board, pending completion of the review. Meanwhile, the audit committee and nominating committee have proposed Eric Phua, the deputy group managing director, to take over in the interim.

Shares in TEE International closed at 4.6 cents on Friday.