Trek 2000's thumbdrive founder was charged over falsified accounts

Trek 2000 International invented the USB thumbdrive around the turn of the millennium, making founder Henn Tan a poster boy of Singapore tech. On September 25, 2019, Tan was charged with 15 offences as far back as 2006: falsification of entries in the 2011-2015 accounts, conspiracy with former CFO Gurcharan Singh to create false entries, cheating auditor Ernst & Young over the FY2015 statements, instigating forged documents ahead of the FY2014 audit, and recklessly failing to announce 47 interested-person transactions (2010-2013) with related companies S-Com Solutions and T-Data Systems.

Singh faced 16 charges, executive director Poo Teng Pin eight, and regional sales president Foo Kok Wah three. Cheating and forgery each carry a maximum 10-year jail term and fine; bail was set at S$300,000 to S$400,000 each. Tan had stepped down as CEO and director in May 2018, and his son Wayne Tan Joon Yong was group president and executive director by the time of the charges.

The irony ran deep: Tan had said Trek's 'single biggest mistake' was sharing its thumbdrive technology too quickly while the patent was still pending, letting clones swamp the market and locking the company into years of piecemeal, expensive litigation. By the quarter ended June 30, 2019, net profit was US$33,000, down 57 per cent year on year, and the stock traded at 7.7 Singapore cents.

The founder stayed hands-on with the numbers: Tan and the CFO allegedly conspired to create false entries in the accounts from 2006 through 2015.

Related-party sales went undisclosed: 47 transactions with S-Com Solutions and T-Data Systems from 2010 to 2013 were never announced to the market.

Auditors were deceived rather than informed, with forged documents and false entries aimed at securing unqualified audit opinions.

An earlier strategic error, sharing thumbdrive technology before the patent was granted, flooded the market with clones and thinned the margins that hid the accounting.

Even the arraignments went unannounced: Trek issued no disclosure and requested no trading halt, drawing SGX RegCo queries the same night.

Founder-inventors who also control the ledger can quietly rewrite it: undisclosed related-party flows and doctored statements end in criminal charges.

The case was mentioned on November 6, 2019, while Tan and Singh made representations to prosecutors and Foo and Poo engaged lawyers. SGX RegCo, which had already issued a notice of compliance in April 2018 requiring an independent review of internal controls, asked whether the charges matched the findings of RSM Corporate Advisory's forensic reports of July 2017 and April 2018, and demanded a shareholder update on internal-control lapses. Trek gave no announcement of the charges and did not respond to press queries by deadline.