The court is restraining mainboard-listed mDR from dealing with a property linked to its loan dispute with MKY Capital, the company said in a bourse filing on Thursday (Feb 10).

 

In 2021, mDR, which is an after-market service provider for consumer mobile products, had appointed receivers for a property located on 8 Devonshire Road, after MKY had defaulted on certain interest payments for a $24 million loan. The property was used to secure mDR' s loan to MKY through an all-monies mortgage.

 

MKY later filed an originating summons against mDR, to seek, among other things, the declaration that MKY is entitled to exercise its equitable right of redemption over the property, and that mDR was wrong to refuse to redeem the mortgage upon payment by MKY.

 

Pending final determination on the originating summons, the court has ordered mDR and the receivers, Abuthahir Abdul Gafoor and Yessica Budiman of AAG Corporate Advisory, to be restrained, whether by themselves or through their agents, from selling, disposing of, or otherwise dealing with the property.

 

mDR had earlier terminated its chief operating officer after investigations by the company and the police into suspected misconduct.

 

The move came after the company said it discovered two separate cases of unauthorised use of the group' s marketing incentive rebates - amounting to around $2.08 million - at its subsidiaries.

MAINBORAD-LISTED mDR has terminated the employment of group chief operating officer Richard Siau effective Dec 23 after investigations by the company and the police into suspected misconduct.

 

In a bourse filing on Thursday (Dec 23), mDR noted that Siau will no longer hold any position in the company and/or the group. The company will search for a suitable replacement and will announce the appointment in due course.

 

In the interim, Ong Ghim Choon, the group chief executive, will assume the roles and responsibilities of Siau.

 

The move comes as mDR, an after-market service provider for consumer mobile products, on Dec 18 announced that it discovered 2 separate cases of unauthorised use of the group' s marketing incentive rebates at its subsidiaries - 3 Mobile Telecom, A-Mobile and Handphoneshop.

 

Two senior executives including one executive officer were persons of interest in the suspected misappropriation. Preliminary internal investigations showed that the aggregate amount misappropriated was approximately S$2.08 million, according to an earlier filing on Dec 18.

 

The individuals had used the rebates for the unauthorised sale of handsets and phone accessories, instead of promotional activities as intended.

 

mDR said that it had made a police report on Dec 15 and has been working with both the Commercial Affairs Department and the police.

 

MAINBOARD-LISTED mDR MDR Limited: Y3D 0%announced on Saturday (Dec 18) that it had discovered 2 separate cases of unauthorised use of the group' s marketing incentive rebates at its subsidiaries - 3 Mobile Telecom, A-Mobile and Handphoneshop - on Dec 10 and Dec 13.

 

Two senior executives, one of whom is an executive officer, are persons of interest in the suspected misappropriation and have been immediately suspended when the cases were discovered. Both are not directors of the company.

 

mDR, an after-market service provider for consumer mobile products, said that the rebates consisted of rebates from the group' s principals, which are typically used for marketing or promotional support. As at Saturday, preliminary internal investigations showed that the aggregate amount misappropriated was approximately S$2.08 million.

 

Instead of using the rebates for promotional activities, both individuals had used the funds for the unauthorised sale of handsets and phone accessories.

 

The company noted that before the cases were discovered, standard operating procedures (SOPs) were in place to request, verify, approve and acknowledge the receipt of handsets and phone accessories. Still, the senior positions of the individuals involved allowed them to override some of the SOPs.

 

mDR said that it had made a police report on Dec 15 and has been working with both the Commercial Affairs Department and the police.

 

To strengthen the internal controls and procedures of the group regarding the marketing incentive rebates, it has commissioned its in-house internal auditor to identify weaknesses with current controls and provide recommendations. The audit firm will report directly to the Audit and Risk Committee (ARC).

 

In the interim, the nature and usage of marketing incentive rebates must be identified, and be signed off by both the group chief executive officer (GCEO) and group chief financial officer (GCFO). Reviews of schedules will also be conducted monthly by accountants or the finance manager and the GCFO.

 

Based on current information available, mDR and the ARC believe that the cases had no direct impact to the group' s net asset value (NAV) and thus, no material impact on their unaudited consolidated financial statements for the year ending Dec 31, 2021 as the reduction in inventory due to the cases of misappropriation corresponded with the reduction in accrued marketing incentive rebates.

 

Additionally, the amount implicated in both cases amounted to approximately 1.41 per cent of the group' s NAV, which the company said is not materially significant.

 

The company also said that there is no direct impact to the group' s profit and loss since the marketing incentive rebates are recognised in the balance sheet.

 

However, the company noted that the group would have been affected by the marketing opportunities lost from the rebates that had been misappropriated, which would have generated goodwill and defrayed some marketing expenses.

 

The company said that there are no concerns regarding the group' s other current assets such as cash reserves and inventory. It has also put in place safeguards such as the daily monitoring of cash balances by the finance division, reporting to the GCFO and a weekly stock count of handsets by the warehouse division.

 

Shares of mDR will resume trading on Monday (Dec 20), after a suspension was requested on Dec 14.