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Kitchen Culture unit sues ex-CEO and two others over payroll irregularities

A subsidiary of Kitchen Culture Holdings has sued its former chief executive officer Lim Wee Li and two foreign nationals, Du Kun and Wang Yanchao, to recover S$520,000 from the trio.

The suit was launched before Singapore' s High Court on Tuesday. The subsidiary, KHL Marketing Asia-Pacific, is alleging that Mr Lim had breached his duties to KHL and conspired with Mr Du and Mr Wang to make these payments to them for a wrongful purpose and with no justification, the board of Kitchen Culture said in a bourse filing on Tuesday.

The group, which is in the business of supplying kitchen equipment, had lodged a police report on July 31, 2021, in relation to " suspected payroll irregularities" concerning two former employees, which amounted to about S$520,000.

Kitchen Culture had earlier dismissed Mr Lim over " grave misconduct" affecting the company' s business. This, it said, was due to findings in an interim report from Baker Tilly Consultancy, which had raised questions over potential breaches by officers and employees of the company.

Catalist-listed Kitchen Culture called for a trading halt on July 7. Its shares last traded at S$0.08.

Kitchen Culture' s ex-CEO claims defamation by directors

KITCHEN Culture' s former chief executive Lim Wee Li has sent letters to two of the company' s independent directors - William Teo and Ang Lian Kiat - alleging they made " defamatory statements" in a regulatory filing released by the company on Sunday.

The two letters of demand, seen by The Business Times (BT), claimed that portions of their statements in Kitchen Culture' s response to Singapore Exchange' s (SGX) notice of compliance were " defamatory, untrue and have impugned (Mr Lim' s) character, credit, and integrity" .

Kitchen Culture, which is in the business of supplying kitchen equipment, had earlier dismissed Mr Lim over " grave misconduct" affecting the company' s business. The dismissal, it said, was in response to findings in an interim report from Baker Tilly Consultancy, which had uncovered potential breaches by officers and employees of the company. Certain failures of Mr Lim were also identified, the company said.

Mr Lim is disputing the characterisations of his actions lacking in " important context" and " incomplete" .

For one thing, he disagreed with the board in saying that a S$1.2 million loan he gave to a third party was " without business justification" . Mr Lim said the loan was justified as it provided " interest income for the company" in light of severe revenue impact from the pandemic.

He added that in the Baker Tilly report, the business justification was classified as " not documented" , rather than " not justified" .

Regarding a S$700,000 cash transfer from Kitchen Culture to himself, Mr Lim said this was a repayment of an interest-free loan that he extended to the company previously. He claimed this was incorrectly recorded in Kitchen Culture' s general ledger as a loan to him.

Kitchen Culture also said three motor vehicles were purchased without board approval and business justification. But Mr Lim said two of the vehicles - a Mercedes Benz and a BMW X6 M - were bought " for the purposes of courting potential investors for (Kitchen Culture' s) fundraising exercises" .

Also, the purchase of the Mercedes Benz was initiated by a former executive director of the company Loy Soo Toon.

The purchase of the third vehicle, an Audi A8L, did not take place because " the ownership title could not be transferred to the company" , according to Mr Lim. " Any monies expended by the company in relation to that transaction was fully refunded."

Finally, Mr Lim argued that some loan repayments he made on behalf of the company to private lenders were wrongly described as posing " a risk of misuse of the company' s funds" .

Two of the three private lenders - Lim Kian Soon and Lim Hon Sean - have signed documents to acknowledge the repayment of their loans to Kitchen Culture, he said. He added that he will also be able to " procure an acknowledgement" from the third private lender, Ong Tiong Seng Tony.

Mr Lim has demanded a response from Mr Teo and Mr Ang within three days of receipt of his letters, dated Aug 2.

BT has reached out to Kitchen Culture for comment.

Kitchen Culture files CAD report independent director Yap defends sacked CEO Lim

The board of Kitchen Culture Holdings has on July 30 filed a report with the Commercial Affairs Department over suspected &ldquo payroll irregularities&rdquo of some $520,000 paid to two former employees.

The two individuals, who were not named, used to work for the company&rsquo s subsidiary KHL Marketing Asia-Pacific.

&ldquo The CAD is now in possession of the relevant documents provided by the company to assist in its investigations,&rdquo states non-executive chairperson Hao Dongting in a July 31 filing.

&ldquo The board and the members of management will fully co-operate with the relevant authorities if and when needed,&rdquo Hao adds.

The filing did not specify if this police report is linked to the company&rsquo s move to remove its CEO Lim Wee Li on July 8 &ldquo over gross default or grave misconduct in connection with or affecting the business of the company.&rdquo

Back in March 22, the board&rsquo s audit and risk committee appointed Baker Tilly Consultancy (Singapore) to undertake an internal control review.

Lim, who brought the company to IPO back in 2011, is in dispute with the board over some of the findings.

Among others, Baker Tilly&rsquo s interim report has raised questions over the timeliness and accuracy of announcements in relation to use of proceeds from Kitchen Culture&rsquo s fund-raising exercises.

According to Baker Tilly, there were internal control weaknesses in cash management and processes, as well as breaches and potential breaches of the Catalist rules.

The board and Lim are also in disagreement whether he had been given time to respond to the relevant findings.

The company&rsquo s share has seen unusual trading activities &ndash triggering a query by the SGX RegCo on June 23.

Following the news of Lim&rsquo s sacking by the board, SGX RegCo, in a notice of compliance, has directed Baker Tilly to expand the scope of the internal review to include among others, the circumstances leading to the breaches of Catalist Rules and internal control weakness, as well as identify parties responsible for the breaches.

In a July 31 response to SGX RegCo&rsquo s notice of compliance, Kitchen Culture listed several instances of potential breaches and irregularities allegedly flouted by Lim.

They include him extending a $1.2 million loan to a &ldquo third party&rdquo without written board approval and business justification.

The company was found to have transferred $700,000 to Lim with no documented board approval and supporting justification.

There&rsquo s also the risk of misuse of company&rsquo s funds from undocumented loan repayments made by Lim on behalf of the company to private lenders. The repayments were subsequently recorded to be in the amounts of $200,000, $250,000 and $304,771 due to Lim himself.

Three vehicles, costing a total of $1.1 million, were bought without board approval and business justification.

&ldquo Mr Lim&rsquo s conduct (as described above) has a serious impact on the Company&rsquo s reputation (being a SGX-listed company) and contributed to significant material weaknesses in the Company&rsquo s internal controls,&rdquo states the company.

Kitchen Culture was in the news last September for buying a 30% stake in big data firm Ooway Technology for $23.92 million.

Well-known commodities cheerleader Jim Rogers is a co-founder of Ooway Group, which is selling the stake in Ooway Technology to Kitchen Culture.

The acquisition was paid by issuing 90 million new shares at 26.58 cents each, making the Ooway shareholders new substantial shareholders of Kitchen Culture with a stake of 21.19%. Lim, meanwhile, saw his stake trimmed from around 28% to just below 22%.

&ldquo With the complementary strengths of Ooway and Kitchen Culture, I believe that our collaborations will yield exciting results in the future,&rdquo he said then.

Lim called the acquisition a chance for the company to explore alternative businesses. &ldquo We have high hopes that this investment would deliver great value to our shareholders,&rdquo he said.

" Fell apart"

There is, however, an independent director Yap Sze Hon who disagreed with the board&rsquo s firing of Lim.

In a statement filed together the July 31 response to the notice of compliance, Yap notes that ties between Lim and the new controlling shareholders from Ooway &ldquo fell apart&rdquo and on July 1, they asked for Lim&rsquo s resignation within 3 days.

&ldquo Given the underlying tension between the 2 controlling & largest shareholders, care has to be exercised to ensure fairness with due regard for the larger interest of the Company and all shareholders,&rdquo states Yap.

Citing meetings with Kitchen Culture&rsquo s internal auditor and lawyers, it was &ldquo ascertained&rdquo that there&rsquo s no evidence of fraud, dishonesty or attempt to conceal information. The lapses flagged by Baker Tilly were &ldquo most technical&rdquo in nature, &ldquo known to certain directors and not likely to be repeated&rdquo by Lim, states Yap.

&ldquo It is premature and unjust to lob the blame of systemic weaknesses squarely onto certain individuals. Most of the lapses were the cumulative result of vague boundaries and customs that need to be rectified by a resolute board working in unison,&rdquo says Yap.

Yap adds that while Lim was chairman and CEO, it is a &ldquo known fact&rdquo that he was focused more on fundraising and the business side rather than &ldquo paper work&rdquo and &ldquo procedural formalities.&rdquo

&ldquo He is akin to a car owner who engages a chauffeur and relies on the latter to display the right parking coupons. If there is a parking violation, a fine rightly has to be paid but should the registered owner be flogged or disqualified from driving for having &lsquo caused&rsquo the said violation?&rdquo states Yap.

Yap also points out that Lim, as Kitchen Culture' s founder, had &ldquo put in millions of dollars into the company while it was in &ldquo financial trouble&rdquo .

&ldquo The lapses occurred not only in a pandemic year, but also amid turbulent changes in the Board leadership, and in a frenetic period when $19 million was raised and the finance department was constantly fire fighting,&rdquo adds Yap.

Kitchen Culture shares have been suspended for trading since July 7.

Kitchen Culture lodges report with CAD on payroll irregularities board responds to SGX

THE board of Kitchen Culture Holdings lodged a report on Friday with the Commercial Affairs Department (CAD) in relation to " suspected payroll irregularities" of two former employees, which amounted to about S$520,000.

The two staff, who were not named, worked at the company' s wholly-owned subsidiary, KHL Marketing Asia-Pacific Pte Ltd. The company has handed over the relevant documents to the CAD to assist in its investigations, it said in a filing on Saturday.

Meanwhile, the board revealed on Sunday that independent director Yap Sze Hon, a member of its nominating committee, disagreed with the board' s decision to fire former chief executive Lim Wee Li.

The group, which is in the business of supplying kitchen equipment, had earlier dismissed Mr Lim over " grave misconduct" affecting the company' s business. This, it said, was due to findings in an interim report from Baker Tilly Consultancy, which had raised questions over potential breaches by officers and employees of the company. Certain failures of Mr Lim were also identified.

Following his termination, Singapore Exchange (SGX) had on July 14 issued a notice of compliance, directing Baker Tilly to " expand its scope" of the internal review. The review was initiated to analyse the circumstances that led to breaches of Catalist rules, as well as identify internal control weaknesses and determine who are the parties responsible.

In its response to SGX' s notice of compliance on Sunday, the Kitchen Culture board listed several potential breaches and irregularities Mr Lim allegedly exposed the company to, which brought on " unnecessary risks and consequences" .

For instance, he gave a S$1.2 million loan to a third party without written board approval and business justification. There was also a S$700,000 cash transfer to Mr Lim with no documented board approval and supporting justification.

Additionally, while loan repayments made by Mr Lim to private lenders on behalf of the company were not documented, the company subsequently recorded these repayments of S$200,000, S$250,000 and S$304,771 due to Mr Lim instead of the private lenders. This creates a risk of misuse of company' s funds.

Lastly, three vehicles, which cost S$1.1 million in total, were bought without board approval and business justification.

Kitchen Culture said that Mr Lim had caused the company to " breach certain Catalist rules" .

He had " expressly authorised the release of an inaccurate announcement" , while failing to implement and monitor the company' s internal accounting controls system. He also did not ensure that transactions were properly authorised and recorded, the report noted.

" Mr Lim' s conduct has a serious impact on the company' s reputation and contributed to significant material weaknesses in the company' s internal controls," said Kitchen Culture.

However, independent director Mr Yap had disagreed with the nominating committee decision to fire Mr Lim.

In an accompanying statement to the filing, he said that the relationship between Mr Lim and the controlling shareholders from big data firm Ooway " fell apart" when the latter came to Singapore in June this year. Thereafter, on July 1, they asked for his resignation within three days through an e-mail.

Kitchen Culture last September said it would take a 30 per cent stake in Ooway Technology for S$23.92 million - which will be funded by issuing 90 million new shares at 26.58 Singapore cents apiece.

Mr Yap added: " Given the underlying tension between the two controlling and largest shareholders, care has to be exercised to ensure fairness with due regard for the larger interest of the company and all shareholders."

Next, Mr Yap claimed that the board dismissed Mr Lim on July 7, without first waiting for the response to the interim report from Mr Lim' s lawyers. They also did not convene a disciplinary hearing, he said.

He then pointed out that in meetings with Kitchen Culture' s internal auditors and lawyers, it was " ascertained that there was no evidence of fraud, dishonesty or attempt to conceal information" . Mr Yap then stated that the lapses flagged out were " mostly technical in nature" . They were also known to certain directors, and not likely to be repeated.

" It is premature and unjust to lob the blame of systemic weaknesses squarely onto certain individuals."

Mr Yap also mentioned that Mr Lim was someone who " focused more on the fund raising and the business side of the company, rather than paper work and procedural formalities" .

" The lapses occurred not only in a pandemic year, but also amid turbulent changes in the board leadership, and in a frenetic period when S$19 million was raised and the finance department was constantly fire fighting," he said, adding that Mr Lim, as the founder, had put in millions of dollars into Kitchen Culture when it was in financial trouble.

Kitchen Culture shares have been suspended from trading since July 7.

wait they dig up more things cant lift suspension

When will they lift suspension

papayaface ( Date: 01-Aug-2021 16:07) Posted:

Sounds like another MCPayment in the making. Good luck

now days cad investigations is very common
suspending stocks also very common.

noobnub ( Date: 01-Aug-2021 14:30) Posted:

sad for those who buy even worse for those picked up 10c and above

noobnub ( Date: 28-May-2021 11:30) Posted:

toh

sad for those who buy even worse for those picked up 10c and above

noobnub ( Date: 28-May-2021 11:30) Posted:

toh

Kitchen Culture files CAD report independent director Yap defends sacked CEO Lim

The board of Kitchen Culture Holdings has on July 30 filed a report with the Commercial Affairs Department over suspected " payroll irregularities" of some $520,000 paid to two former employees.

The two individuals, who were not named, used to work for the company' s subsidiary KHL Marketing Asia-Pacific.

" The CAD is now in possession of the relevant documents provided by the company to assist in its investigations," states non-executive chairperson Hao Dongting in a July 31 filing.

" The board and the members of management will fully co-operate with the relevant authorities if and when needed," Hao adds.

The filing did not specify if this police report is linked to the company' s move to remove its CEO Lim Wee Li on July 8 " over gross default or grave misconduct in connection with or affecting the business of the company."

Back in March 22, the board' s audit and risk committee appointed Baker Tilly Consultancy (Singapore) to undertake an internal control review.

Lim, who brought the company to IPO back in 2011, is in dispute with the board over some of the findings.

Among others, Baker Tilly' s interim report has raised questions over the timeliness and accuracy of announcements in relation to use of proceeds from Kitchen Culture' s fund-raising exercises.

According to Baker Tilly, there were internal control weaknesses in cash management and processes, as well as breaches and potential breaches of the Catalist rules.

The board and Lim are also in disagreement whether he had been given time to respond to the relevant findings.

The company' s share has seen unusual trading activities &ndash triggering a query by the SGX RegCo on June 23.

Following the news of Lim' s sacking by the board, SGX RegCo, in a notice of compliance, has directed Baker Tilly to expand the scope of the internal review to include among others, the circumstances leading to the breaches of Catalist Rules and internal control weakness, as well as identify parties responsible for the breaches.

In a July 31 response to SGX RegCo' s notice of compliance, Kitchen Culture listed several instances of potential breaches and irregularities allegedly flouted by Lim.

They include him extending a $1.2 million loan to a " third party" without written board approval and business justification.

The company was found to have transferred $700,000 to Lim with no documented board approval and supporting justification.

There' s also the risk of misuse of company' s funds from undocumented loan repayments made by Lim on behalf of the company to private lenders. The repayments were subsequently recorded to be in the amounts of $200,000, $250,000 and $304,771 due to Lim himself.

Three vehicles, costing a total of $1.1 million, were bought without board approval and business justification.

" Mr Lim' s conduct (as described above) has a serious impact on the Company' s reputation (being a SGX-listed company) and contributed to significant material weaknesses in the Company' s internal controls," states the company.

Kitchen Culture was in the news last September for buying a 30% stake in big data firm Ooway Technology for $23.92 million.

Well-known commodities cheerleader Jim Rogers is a co-founder of Ooway Group, which is selling the stake in Ooway Technology to Kitchen Culture.

The acquisition was paid by issuing 90 million new shares at 26.58 cents each, making the Ooway shareholders new substantial shareholders of Kitchen Culture with a stake of 21.19%. Lim, meanwhile, saw his stake trimmed from around 28% to just below 22%.

" With the complementary strengths of Ooway and Kitchen Culture, I believe that our collaborations will yield exciting results in the future," he said then.

Lim called the acquisition a chance for the company to explore alternative businesses. " We have high hopes that this investment would deliver great value to our shareholders," he said.

" Fell apart"

There is, however, an independent director Yap Sze Hon who disagreed with the board' s firing of Lim.

In a statement filed together the July 31 response to the notice of compliance, Yap notes that ties between Lim and the new controlling shareholders from Ooway " fell apart" and on July 1, they asked for Lim' s resignation within 3 days.

" Given the underlying tension between the 2 controlling & largest shareholders, care has to be exercised to ensure fairness with due regard for the larger interest of the Company and all shareholders," states Yap.

Citing meetings with Kitchen Culture' s internal auditor and lawyers, it was " ascertained" that there' s no evidence of fraud, dishonesty or attempt to conceal information. The lapses flagged by Baker Tilly were " most technical" in nature, " known to certain directors and not likely to be repeated" by Lim, states Yap.

" It is premature and unjust to lob the blame of systemic weaknesses squarely onto certain individuals. Most of the lapses were the cumulative result of vague boundaries and customs that need to be rectified by a resolute board working in unison," says Yap.

Yap adds that while Lim was chairman and CEO, it is a " known fact" that he was focused more on fundraising and the business side rather than " paper work" and " procedural formalities."

" He is akin to a car owner who engages a chauffeur and relies on the latter to display the right parking coupons. If there is a parking violation, a fine rightly has to be paid but should the registered owner be flogged or disqualified from driving for having &lsquo caused' the said violation?" states Yap.

Yap also points out that Lim, as Kitchen Culture' s founder, had " put in millions of dollars into the company while it was in " financial trouble" .

" The lapses occurred not only in a pandemic year, but also amid turbulent changes in the Board leadership, and in a frenetic period when $19 million was raised and the finance department was constantly fire fighting," adds Yap.

Kitchen Culture shares have been suspended for trading since July 7.

SGX RegCo orders Kitchen Culture to expand scope of internal control review

SINGAPORE Exchange Regulation (SGX RegCo) issued a notice of compliance to Kitchen Culture during the Wednesday midday trading break, asking the company' s audit and risk committee (ARC) to commission additional inquiries. SGX RegCo also asked the nominating committee to disclose more details about the recent termination of Kitchen Culture' s chief executive.

The regulator has directed the ARC to commission Baker Tilly Consultancy (Singapore) to expand its scope of work.

Baker Tilly had earlier been appointed to undertake an internal control review of Kitchen Culture, a home interiors supplier, particularly in the area of cash management. SGX RegCo now wants Baker Tilly to also look into " circumstances that led to breaches and/or potential breaches of Catalist rules" as well as internal control weaknesses uncovered by Baker Tilly' s earlier investigations and listed in the consultancy' s interim report. The parties responsible for these breaches are also to be identified.

During the course of its work, Baker Tilly must report concurrently to Kitchen Culture' s ARC, SGX RegCo, and the company' s continuing sponsor SAC Capital.

Kitchen Culture' s board had on July 7 dismissed CEO Lim Wee Li, citing " gross default or grave misconduct" in connection with or affecting the company' s business.

Also on Wednesday, Kitchen Culture' s board released a statement saying that Mr Lim' s termination was not based on an earlier whistleblowing report - as had been alleged by Mr Lim - but was solely based on the findings of Baker Tilly' s interim report.

Among other things, the interim report said Kitchen Culture' s use of proceeds was not reported with the timeliness required under Catalist rules. Furthermore, a February announcement had contained inaccuracies pertaining to the amounts used and the periods in which they were used.

Mr Lim has called his dismissal " unlawful" and contended that he was not given sufficient opportunities to respond to certain allegations against him.

But the board, in its Wednesday statement, said Baker Tilly had gone through its findings with Mr Lim. Any of his verbal comments that were supported by documents were added to the interim report, and Mr Lim was also invited to provide a written response to the findings.

It added that Mr Lim had also had time to provide further responses in the five weeks leading up to his dismissal.

" During these five weeks, Mr Lim requested Baker Tilly' s engagement letter, and copies of the correspondence between Baker Tilly and the audit committee leading up to the issuance of the interim report. These were not provided as they have no bearing whatsoever on whether Mr Lim had failed in his duties as CEO," the board said.

Mr Lim had said in an emailed statement to The Business Times that he did not agree with the decision to terminate him.

" The allegations against me came on the back of an internal control review of the company. My lawyers have been asking the company for documents to allow me to understand the context leading up to the internal control review of the company. However, the company did not provide the requested documents," he said.

He also expressed disappointment that he was terminated on the same day that his written responses to their allegations were sent to the company' s lawyers.

In its statement, the board said that it had considered Mr Lim' s written responses and decided that his termination was justified.

" The company rejects Mr Lim' s allegation that he was not afforded due inquiry, as he has had ample opportunity, and has responded to the matters raised in the interim report, and has also had access to all relevant documents," the board said.

Regarding the whistleblower report, the board said that it was sent by an employee who wished to remain anonymous to specific independent directors.

The whistleblower alleged wrongdoings in Kitchen Culture and suggested that it did not have adequate and effective internal controls. The company is still investigating these allegations.

The board said it has not taken any action against Mr Lim or any other person relating to matters raised in the report, and that the report will remain confidential under the company' s whistleblower policy.

Kitchen Culture refutes outgoing CEO Lim' s statement on his termination

Kitchen Culture has appointed Lincoln Teo Choong Han as interim CEO following the termination of outgoing CEO Lim Wee Li.

Teo' s appointment was effective on July 8, one day after Lim' s termination on July 7.

Lim has also resigned from his position as director of the company on the same day.

According to a filing by Kitchen Culture on July 7, Lim was terminated due to him being in " gross default or grave misconduct in connection with or affecting the business of the company" .

On June 23, Kitchen Culture explained that it had appointed Baker Tilly Consultancy to conduct an internal control review of the company and its wholly-owned subsidiary, KHL Marketing Asia-Pacific, following the fundraising exercises in 2020 and related matters.

Kitchen Culture added that its audit committee had reviewed Baker Tilly' s findings and recommended that the company' s board adopt the latter' s recommendations.

The explanations were issued as a response to the query from the Singapore Exchange Regulation (SGX RegCo) regarding Kitchen Culture' s " unusual volume movements" in its shares on June 22.

In a filing on July 14 detailing Lim' s termination, Lim alleged that he was terminated by the board pertaining to matters that " involved the conduct of the entire board or others who were or are members of the board" .

Lim has also accused Kitchen Culture of terminating him from his position as CEO before completing its investigations following the interim report submitted by Baker Tilly.

On the whistleblowing report that Kitchen Culture' s audit and risk committee allegedly received on June 28, which led to the company' s decision to terminate Lim, Lim says that the report was not extended to him.

The questions put before the board regarding Lim' s possible misconduct were also removed from the agenda, says Lim.

In a separate filing, Kitchen Culture' s board of directors refuted Lim' s claims that he was terminated based on the whistleblowing report.

The termination, says the board, was based on " certain conclusive findings" in the interim report written by Baker Tilly.

Lim' s verbal and written responses were considered and noted in the paper.

" The interim report identified certain clear acts, and failures to act, by Mr. Lim, which Mr. Lim either did not deny, or could not explain, in his written responses to Baker Tilly. These acts, and failures to act, were the basis for the Board' s decision to terminate Mr. Lim' s employment," says Kitchen Culture.

Kitchen Culture adds that Lim, as CEO, was primarily responsible for the management and conduct of the company.

" After the board decided to terminate Mr. Lim' s employment, Mr. Lim' s lawyers sent a letter dated 7 July 2021, containing Mr. Lim' s further written responses to the interim report. The board has carefully considered Mr. Lim' s further written responses and has decided that the termination of Mr. Lim' s employment was justified. Mr. Lim was informed of the board' s decision on 12 July 2021."

Good for the company that dishonest CEO was sacked. He could still be prosecuted for breach of fiduciary duties. Company should be in better hands after a new CEO is recruited. Huat ah.. Share price should shot up when re-listed. Good luck

Yulin1968 ( Date: 13-Jul-2021 20:40) Posted:

ex-CEO misconduct could put himself into jail for years, and he maybe no choice but to sell down all his shares bf the worst comes.

Joelton ( Date: 13-Jul-2021 09:29) Posted:

Kitchen Culture suspends trading, confirms CEO' s dismissal was due to review findings

THE board of Kitchen Culture Holdings has confirmed that the recent dismissal of chief executive Lim Wee Li was based on findings in an interim report from Baker Tilly Consultancy.

The group, which is in the business of supplying kitchen equipment, has also suspended the trading of its shares on Monday following a trading halt called on July 7.

In its response to Singapore Exchange (SGX) queries on Monday, the board said its audit committee (AC) appointed Baker Tilly to undertake a review in the area of cash management by Kitchen Culture' s management and KHL Marketing Asia-Pacific following fundraising exercises completed in 2020 and related matters.

The review was initiated due to the group' s management' s unsatisfactory response to questions raised by AC members at a board meeting in February regarding reasons for the re-allocation and utilisation of proceeds from said fundraising exercises.

Separately, the board and Mr Lim are in a dispute over the latter' s responses, or lack thereof, to the interim report, according to legal letters dated July 11 seen by The Business Times.

The board had alleged that no written comments were received from Mr Lim on the Baker Tilly report, which Mr Lim has disputed. He claimed that he had repeatedly requested documents and information relating to the report as well as information and documents in meetings he did not attend.

Mr Lim also maintained his position that the termination of his employment was " unlawful" .

In its summary of findings from the interim Baker Tilly report posted in its response to SGX queries, Kitchen Culture' s board highlighted that certain fund transfers were made without written approval, supporting documents, business justifications and disclosure to SGX.

There were also inadequacies in the approval process, documentation preparation and priority and mode of repayment of borrowings from private lenders amounting to S$3.7 million and HK$10 million (S$1.7 million).

Moreover, some interested persons and interested person transactions were not identified, monitored, reviewed and disclosed, including the purchase of a motor vehicle and the appointment of a spouse.

There was also no independent approval and business justifications for some executive directors' entertainment expenses. In the case of a specific gift to a third party, there was no acknowledgement from the gift recipient, the board said.

The board has also claimed that there were inadequate planning, monitoring and reporting for the use of proceeds obtained through the group' s first and second placement exercises, as well as a convertible loan agreement dated May 3, 2020.

The board alleged that the use of proceeds was not reported timely as required under Catalist rules. Furthermore, the Feb 1 announcement this year had contained inaccuracies pertaining to the amounts used and the periods they were used, it added.

Other matters highlighted include a lack of delegation of authority, segregation of duties and independence in the approval and processing of certain payments. There was also no written approvals and documented justification for the hiring of certain managerial positions and the salary increment of a former executive director.

The board noted there are " breaches and potential breaches" of Catalist rules, laws and regulations. It will conduct further investigations on the depth and breadth as such and make necessary updates to shareholders.

" The board will vigorously protect and defend its interests and pursue all legal remedies against the relevant parties, including but not limited to commencing civil actions to pursue the losses that may have been suffered by the group," it added.

On July 8, Kitchen Culture announced via a bourse filing that its board had on the previous day passed a resolution by a majority of director votes to cease Mr Lim' s employment with immediate effect as the board is of " reasonable opinion" that Mr Lim is in " gross default or grave misconduct" in connection with, or affecting the company' s business.