Tee International's CEO directed S$6.55M in unauthorised payments — and lost his job

Between July 2018 and May 2019, subsidiaries of SGX mainboard-listed engineering group Tee International made unauthorised remittances totalling S$6.55 million to related parties, allegedly on the instruction of group CEO and managing director Phua Chian Kin. The board and executive committee were unaware of the transfers.

The scheme surfaced while the group prepared its accounts for the year ended May 31, 2019: S$3 million of the remittances had been recorded as 'other receivables', and external auditor Deloitte raised a red flag when it could not verify their nature. They included S$3.75 million paid by wholly owned units PBT Engineering and Trans Equatorial to Phua and Oscar Investment, a BVI company wholly and beneficially owned by him, across four payments in February and March 2019. Phua said the money covered expenses to secure an engineering project, but provided no documents.

Separately, S$2.8 million had flowed the other way in July 2018, from Oscar Investment into PBT Engineering, said to activate a banking credit line; it was repaid five days later.

The board moved once SGX asked questions: monies were fully repaid by August 29, but Phua was removed as an authorised signatory for all payments and relieved of his duties pending a widened review; deputy group managing director Phua Boon Kin took over in the interim. Internal auditor Protiviti widened its review of payment authorisation controls, and the board engaged an external independent investigator to cover FY2018 through August 31, 2019. Tee International applied to SGX for more time to hold its AGM and release Q1 FY2020 results.

S$6.55M moved without board knowledge; the CEO was stripped of payment signatory rights and relieved of his roles; AGM and Q1 results were delayed.

One executive could direct subsidiary payments to his own related parties for eleven months without board visibility.

S$3 million of the remittances sat in 'other receivables' — they entered the books without a documented business purpose.

The CEO's explanation, that the money secured an engineering project, came with no supporting documents at all.

Related-party flows like the S$2.8 million Oscar-to-PBT deposit ran outside any normal treasury approval.

Payments authorisation is the control that matters: one executive directing subsidiary wires to his own related parties for 11 months means nobody was checking.

The group said the monies were fully repaid by August 29, 2019, but Deloitte told the company it was unable to ascertain the nature and purpose of the remittances or their benefit to the group, and asked whether other payments had been made for the benefit of Phua, his family, or entities in which he held 20% or more of voting power. The board said it could not yet determine whether more undisclosed remittances existed. Its shares closed at 4.6 Singapore cents.