Astaka's executive director hid RM125M loan demands — SGX ordered him out

Astaka Holdings' wholly-owned subsidiary Astaka Padu appointed China State Construction Engineering (CSCE) as main contractor for a serviced-apartments development in Malaysia, then could not pay outstanding progress claims. The parties converted the sums into a loan: on April 12, 2017 CSCE agreed an interest-free facility due June 30, 2017, extendable once to September 30, 2017 at 8.5% late interest per annum.

Three letters of demand followed. The first, received October 2, 2018 and forwarded to executive director Zamani Bin Kasim, former CFO Lee Shih Yi and Party A, claimed RM51.48 million — 313.5% of Astaka's cash. The second, February 13, 2019, claimed RM113.54 million, or 1,420% of the group's cash. The third, July 11, 2019, claimed RM125.35 million — 659.3% of cash and 62.4% of net asset value. None was disclosed to the board.

On August 27, 2019 the audit committee asked in a meeting attended by Zamani, Party A and Lee whether any legal demands had arrived. Management confirmed none, apart from a RM1.8 million supplier letter — a statement SGX later called a deliberate falsehood. When the committee chairman sought reconfirmation by email on September 5, 2019, Zamani admitted the three letters; the company announced them the same day, flagged a prior-year adjustment for under-recognised interest expense, and requested a voluntary trading suspension.

The demands dwarfed every liquidity yardstick — the last alone was 659% of group cash and 62% of net asset value — yet management assessed them as immaterial for disclosure.

The letters stayed inside a three-person circle of Zamani, Lee and Party A, so the board excluding Zamani never saw them.

Zamani answered the audit committee's direct question with a denial and only conceded on September 5, 2019, converting a solvency problem into an integrity finding.

A demand worth multiples of your cash is material by any test; hiding it does not shrink the debt, it converts a liquidity problem into an integrity disqualification.

A resolution agreement signed July 22, 2021 had the company, Zamani, Party A and Lee plead guilty to failing to promptly disclose the third demand letter. SGX ordered Zamani to resign from all current positions and barred him from any company post for two years from August 17, 2021, saying his deliberate falsehood cast doubt on his character and fitness. It publicly reprimanded the company, Zamani and Lee; Party A got a private warning and mandatory training. Trading, suspended since September 2019, had not resumed at publication, and the group faced legal proceedings from CSCE.