Silver Bird auditors did not raise red flag, says ex-chairman

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This article first appeared in The Edge Financial Daily, on March 3, 2017.

 

KUALA LUMPUR: There was no red flag raised to Silver Bird Group Bhd’s board on financial irregularities in the bread manufacturer until the end of 2011, according to its former chairman Datuk Gan Khuan Poh.

Gan took the stand at the criminal sessions court yesterday morning at the continued hearing on Silver Bird’s falsified reports on its revenue to Bursa Malaysia.

Gan told the court that while he was chairman, neither the company’s internal auditors nor external auditors had issued a letter to the management alerting it to the accounting irregularity issue that was brewing in Silver Bird until the third quarter of 2011.

Silver Bird, whose substantial shareholders include Lembaga Tabung Haji, Berjaya Corp Bhd and Permodalan Felda Malaysia Bhd, was later renamed High-5 Consolidated Bhd and was taken private. The bread maker ceased operations in June 2016.

In September 2013, Datuk Jackson Tan Han Kook, 59, and Derec Ching Siew Cheong, 51, were each charged with seven and eight counts respectively, of furnishing false statements to Bursa in relation to falsified statements contained in Silver Bird’s eight unaudited quarterly financial accounts for the financial years ended Oct 31, 2010 and 2011.

When the financial irregularities were uncovered, Silver Bird announced in February 2012 that the stock exchange had categorised it as a financially distressed company under Practice Note 17.

The group then removed both Tan and Ching from its board of directors shortly after.

If convicted, both Tan and Ching will be liable to imprisonment for no more than 10 years and a maximum fine of RM3 million.

To recap, in February 2013, the bread maker made a surprising announcement on a RM112 million hole in its finances — which later turned out to be RM297 million. Gan and its board of directors immediately suspended the then group managing director Tan, Ching and general manager of accounts and finance Lai Poh Mei.

It then subsequently filed a RM125 million civil suit against Tan, Ching and Lai in August 

2012.

The company ceased operations in June 2016, following a court order obtained by landlord AmanahRaya Real Estate Investment Trust to vacate the operating premises.