THE former managing director of Catalist-listed KLW Holdings, Lee Boon Teck, was on Friday charged with misappropriating S$16.2 million from the company, among other offences.

 

The police said in a statement on Friday that 12 charges were brought against him for various offences.

 

Under Section 408 of the Penal Code, he faces one count for allegedly misappropriating a sum of S$2.2 million from the company and another two counts for allegedly engaging in a conspiracy with another person to misappropriate a total sum of S$14 million from the company.

 

Lee' s business associate, Chan Ewe Teik, was charged on Friday with allegedly abetting him in the misappropriation of the S$14 million from the company.

 

For allegedly authorising the company to provide a loan of S$1.95 million to himself, Lee faces one count under Section 162(6) of the Companies Act.

 

He also faces three counts of falsification of accounts under Section 477A of the Penal Code, for allegedly instigating false entries in the company' s financial statements, as well as one count of under Section 471 of the Penal Code for allegedly using a document which he had reason to believe was forged.

 

Another two counts were brought against him under Section 331 of the Securities and Futures Act, for allegedly giving his consent for the company to make certain misleading statements.

 

Meanwhile, his alleged negligence in relation to the company' s failure to disclose certain information that the Singapore Exchange (SGX) Catalist Rules require to be immediately disclosed led to two counts under Section 331 of the Securities and Futures Act.

 

SGX had in 2016 reprimanded KLW Holdings and two former key executives, Lee and former group financial controller Jaslin Gaw, for breaching several Catalist rules. The company was then already under investigation by the Commercial Affairs Department for an alleged offence under the Securities and Futures Act, and SGX had referred the case and potential breaches of the law to the relevant authorities.

 

The reprimand follows a 2015 special audit, which found lapses in internal controls and potential breaches of disclosure rules at KLW.

 

A few breaches were linked to two proposed property development projects in Bali, Indonesia, and Zhangye in Gansu province in China. Based on term sheets signed, commitment fees of about S$16.2 million had to be paid by KLW to counterparties for the deals.

 

These fees were meant to be refunded to KLW if no definitive agreements were signed by July 2014. The deals did not go through, but the fees were not refunded at that point. 

 

KLW also failed to disclose that monies from various fund-raising exercises had been used to pay for the commitment fees, as well as repayment of loans to Lee. Some disclosures related to the rights issue and the share placement were wrong.

 

KLW had also wrongly classified and materially misstated the S$16.2 million, as well as the S$1.95 million advanced to Lee, as &ldquo cash and bank balances&rdquo in the company&rsquo s half-year 2014 financial statement. 

 

Lee had also wilfully caused another breach when KLW failed to immediately announce its acquisition of Key Bay Furniture Co Ltd, a furniture company in Vietnam. He was the only member of the board who was aware, at the material time, of the acquisition, and failed to inform the board of it.