(Aug 7): Last week, The Edge Singapore had published an excerpt of an online commentary by Mak Yuen Teen on YuuZoo Corp. Mak, associate professor at the department of accounting at the National University of Singapore Business School, had raised questions about the company’s corporate governance, disclosures and accounting.
See: Scrutinising YuuZoo’s deals
Its chief operating officer Mohandas has since provided a response in an email, reproduced below:
“An independent review of the claims that have been made is, at [our chairman Thomas Zilliacus’] suggestion, being launched. YuuZoo has already in public addressed Professor Mak’s concerns. His latest online article merely repeats what he [has already] said. At the AGM of YuuZoo, Thomas Zilliacus thanked Professor Mak for bringing up corporate governance issues that could improve the performance of the company and increase investors’ trust in the same, and stated that the company always welcomes an open and constructive dialogue.
“He also invited Professor Mak to become an adviser for YuuZoo, so that he could help the company in ensuring that corporate governance was strengthened in areas he felt it [was] needed.
“Instead of accepting the invitation to help the company improve its governance, he continued his public attacks on YuuZoo in yet another article [in The Business Times] on Tuesday July 11, and is now doing the same in his latest online article.
“One has to question the motive behind Professor Mak’s articles. He is not a shareholder of YuuZoo, nor does he hold any regulatory position. If he genuinely wants to improve the corporate governance of YuuZoo, then why did he decline the offer to advise the company on these matters?
“The purpose of corporate governance is to facilitate effective, entrepreneurial and prudent management that can deliver the long-term success of the company. YuuZoo welcomes all parties who share a genuine concern for the company to work together to ensure that corporate governance is strengthened, instead of making accusations in public that only hurt the company and its shareholders.”
Mak tells The Edge Singapore that he found YuuZoo’s offer to be an adviser “bewildering and somewhat offensive”.
In an email, he says: “The company had already said that I was making erroneous statements and asking misleading questions, so why make me an adviser if it feels I was just talking nonsense? I wonder if the company had even for a moment considered the problematic perception of making an adviser out of a public critic. In any case, I never accept advisory or other roles in companies that I intend to criticise, as I consider it to be highly unethical.”
An academic who specialises in corporate governance and accounting issues, Mak has written several commentaries on locally listed companies over the years. Other companies that he has written about recently include Singapore Post and Noble Group. SingPost had initiated reviews and reforms following Mak’s commentaries.
Separately, YuuZoo on July 28 responded to some queries from the Singapore Exchange regarding its latest annual report and appendix published on June 21. On Page 25 of its annual report, YuuZoo discloses that there were no transactions with interested persons last year. This is inconsistent with Note 21 in the annual report, in which the company says it entered into significant related party transactions last year with parties connected to a director of the company.
YuuZoo explains that it has a service agreement with Sandbox Global Co, in which Mobile FutureWorks has a controlling interest. Mobile FutureWorks is a controlling shareholder of YuuZoo. Zilliacus has a controlling interest in Mobile FutureWorks.
YuuZoo outsources to Sandbox services and development work related to mobile games. For the work done, YuuZoo pays Sandbox a fixed fee of US$15,000 ($20,372) a month. YuuZoo has also placed its Bangkok-based employees in the office of Sandbox, and pays for that with an agreed portion of the general office expenses. The service agreement has been in place since before YuuZoo was listed.
YuuZoo says it did not make separate quarterly announcements on each payment, as the payments for each quarter fell below the $100,000 threshold, and as no new agreement was signed between the parties last year.
Also, in 2015, YuuZoo had signed an agreement with Circle of Champions. Mobile FutureWorks has a controlling interest in the latter.
In February 2017, a valuation of the benefits to YuuZoo of the agreement with Circle of Champions was conducted. The valuation determined that YuuZoo gained $17 million from the contract. No valuation was done in 2016, nor was any agreement signed, nor any payments made.
