KUALA LUMPUR: Tanjung Offshore Bhd has lodged a police report on the group’s acquisition of a chromite mine in the Philippines and a rubber-material substitute plant in China. It has also made a formal complaint to the Malaysian Anti-Corruption Commission (MACC) regarding a property purchase in the United Kingdom.
In a statement yesterday, the company said the three deals were negotiated and executed under the previous board of directors and were identified as irregular following a forensic audit by Ferrier Hodgson.
The MACC report was filed against a former director of Tanjung Offshore (fundamental: 1.65; valuation: 0.9) and several ex-senior officials for “corruptly receiving gratification” after facilitating the company’s purchase of a property in Birmingham, UK.
According to Tanjung Offshore’s statement, it also made a police report against the same former director and a China national for dishonestly and fraudulently misappropriating the company’s funds in the Philippine chromite mine deal and ethylene propylene diene monomer (EPDM) project in China.
Ferrier Hodgson noted that excessive professional fees of RM2.7 million were paid for the EPDM project, out of the total investment of RM3.2 million. The payments had bypassed the company’s corporate protocol.
“Similarly, Ferrier Hodgson found that Tanjung Offshore again bypassed corporate protocol by investing RM6.2 million in a chromite mine in the Philippines in 2013,” the statement read.
On the property acquisition in Birmingham, Tanjung Offshore spent RM62.7 million to purchase the eight-storey office building, out of which a total of RM27.4 million for refurbishment is still being investigated.
“We filed these formal reports to help clear the decks and put the company back in shape. This means cleaning up the questionable deals identified by the Ferrier Hodgson forensic audit,” said Tanjung Offshore executive director and group chief executive officer Rahmandin Md Shamsudin.
He said the filing of the reports was one of the first steps as recommended by the company’s special task force, adding that “there will be more to come”.
“The reports to the MACC and the police will help Tanjung Offshore get to the bottom of the irregularities in these deals as spelled out by minority shareholders and some board members.
“We will continue to work with the MACC, police, the regulatory bodies and legal advisors to ensure these wrongs highlighted by the forensic audit are put right,” he said.
To recap, Tanjung Offshore signed a sale and purchase agreement with UK-based Cross Space Securities in March 2014 to buy its wholly-owned subsidiary Wavenet Investment for £6.7 million. Wavenet owned 100% of Sparkling Light Investments which in turn owned the building.
Subsequently, Tanjung Offshore embarked on a £4.8 million refurbishment of the property to yield a minimum of 91 one- and two-bedroom residential units.
“There appears to be no physical work on site and this has prompted Tanjung Offshore to take action against the relevant parties for non-performance and immediate recovery,” read a press statement dated June 5.
Notably, the company saw a slew of boardroom changes in March this year. Former directors Shahrizal Hisham Abdul Halim and Tan Wee Koh resigned on March 31, while former executive director Muhammad Sabri Ab Ghani resigned on March 23.
It is also worth noting that the three deals were signed when former managing director Datuk Harzani Azmi was at the helm of the company.
Ferrier Hodgson was appointed special auditor on March 23 this year to review matters highlighted by the independent committee of Tanjung Offshore, which include the Birmingham property deal and the investment in an EPDM project in China.
Last month, it was reported that one of Tanjung Offshore’s former directors had been detained by the MACC as part of an investigation into the alleged fraudulent acquisition of Gas Generators (M) Sdn Bhd in 2013 for RM34.3 million.
Tanjung Offshore closed two sen or 4.4% higher at 47.5 sen per share yesterday, with a market capitalisation of RM172.47 million.
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This article first appeared in The Edge Financial Daily, on June 24, 2015.