Fictitious invoices, discrepancies revealed in Khee San financing drawdown probe

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KUALA LUMPUR (Sept 25): Sale and purchase invoices that appear to be fictitious are among findings in candy manufacturer Khee San Bhd's ongoing financing drawdown probe, which also revealed discrepancies between summary listings of invoices submitted for credit facility drawdown and the actual documents attached to the listings.

In a statement to Bursa Malaysia today, Khee San, which has appointed BDO Governance Advisory Sdn Bhd to undertake the investigation, said BDO's review revealed that all applications of the credit facilities were signed by Datuk Seri Liew Yew Chung.

"The above investigation is still in progress and is expected to be completed in October 2020. The board is also consulting its legal counsel on the appropriate course of action to be taken," Khee San said.

Khee San did not specify in the Bursa filing today Liew's designation in the company.

In a Bursa filing on Sept 13, 2019, Khee San announced Liew's resignation as chairman on that day.

In the filing today, Khee San said BDO's review revealed that sales invoices amounting to RM39.45 million submitted as basis for drawdown of credit facilities "appear to be fictitious and for products not manufactured by Khee San".

Khee San said the review revealed that purchase invoices amounting to RM4.47 million, which are not supported by stock card movements, were submitted as basis for drawdown of credit facilities.

Out of the RM4.47 million, "RM2.92 million in respect of purchases from Secret Ingredients Sdn Bhd appear to be fictitious", Khee San said.

According to Khee San, BDO's review revealed "discrepancies between summary listings of invoices submitted for credit facility drawdown and the actual invoices attached to the summary listings".

Khee San said BDO's review, which revealed "financing drawn in excess over total amounts stated in invoices" also showed "financing from two different banks over the same invoices".

Khee San said the initial review period for BDO's scope of work covered data and information from Oct 1, 2018 to March 31, 2019.

The review period was subsequently extended to July 4, 2019, according to Khee San.

Khee San said its board of directors had on Sept 14, 2020 instructed BDO to complete and report on the tracing of the flow of funds.

According to Khee San, the fund-flow tracing involves an analysis, which demonstrates how funds drawn down from bankers’ acceptances were used.

BDO has also been instructed to provide a breakdown of bankers’ acceptance issuance by each bank, according to Khee San.

At the time of writing this report, Liew had not issued a statement in response to BDO's findings.

At Bursa's 12:30pm break today, Khee San settled up one sen or 3.77% at 27.5 sen for a market capitalisation of about RM31.46 million. The stock saw 13,700 shares traded.

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Candy maker Khee San engages BDO in financing drawdown probe