KUALA LUMPUR (Sept 23): Borneo Aqua Harvest Bhd (Bahvest) and its nine directors were publicly reprimanded by Bursa Malaysia today, as they failed to establish an independent internal audit, while the company’s representations in the annual reports were also inaccurate and misleading.

In a filing with Bursa Malaysia today, the marine aquaculture company said it was publicly reprimanded for breaching the ACE Market listing requirements. In addition, the penalties at a total of RM40,000 were imposed on four directors.

Bahvest Chairman Datuk Seri Md Kamal Bilal, Managing Director and CEO Datuk Lo Fui Ming, and Directors Chong Khing Chung and Mejar (K) Datuk Samsudin Yahya, were publicly reprimanded and fined RM10,000 each.

Meanwhile, its Executive Directors Lo Teck Yong and Akinori Hotani, as well as its former directors Lo Ken Hin, Chiu Kui Tzu and Chang Mei-Lin, were also reprimanded by the stock exchange.

Bahvest said it was publicly reprimanded for failing to establish an internal audit function, which was independent of the activities it audits since April 2010 until December 2012.

Besides, Bahvest’s representations in its annual reports for the financial year ended March 31, 2011 (FY11) and FY12, were also inaccurate and particularly misleading, compared to the existence of an internal audit function and internal audit activities carried out during FY11 and FY12.

The stock exchange said it viewed the contraventions seriously, as the requirement for listed companies to establish an internal audit function is important, to ensure an independent and regular review of the risk management, internal control and governance processes within the listed company.

To recap, the engagement of KPMG as the internal auditors of Bahvest had expired in March 2010, and it had failed to establish an internal audit function thereafter.

However, Bahvest had in its annual report 2011, represented that it had engaged KPMG as the internal auditors of the company since June 2007.

It highlighted that the audit committee had during FY11, ensured the outsourced internal audit function had adequate resources, consisting of people who were adequately skilled.

Subsequently in its annual report 2012, Bahvest went on to say that it had outsourced its internal audit function to an independent professional service, to conduct an independent review of the group’s system of internal control.

It also claimed that the firm appointed, was independent of the activities carried out by them and also the external auditor.

Bahvest share price staged a sharp rebound today, up 18 sen or nearly 20% to RM1.09, with some 3.24 million shares changing hands. Prior to that, the stock had been on the downtrend, falling from the high of RM1.34 in January to a low of 85 sen last month. Year-to-date, share price of Bahvest has gone down 18 sen or 14%.