Ishak – no newcomer to corporate controversy

WHILE the jury is still out as to whether Datuk Ishak Ismail (pic) is a white knight or opportunistic raider in Kenmark Industrial Co (M) Bhd, his return to the limelight after a long absence somewhat brings back memories of eye-brow raising corporate tussles and surprise manoeuvres that had once made him an icon in Malaysia’s corporate scene.

While he has had a fair share of the limelight since the 1990s, starting with Idris Hydraulic, Aokam Perdana Bhd and later KFC Holdings Bhd, Ishak had been relatively quiet for much of the last decade, at least as far as corporate news was concerned.

The Penang-born Ishak last made the front pages of business newspapers in 2005, when he was actively fending off parties who had sought to take over KFC’s parent company, QSR Brands Bhd. Since the late 1990s, it was widely perceived that Ishak was in control of QSR and KFC.

KFC, during Ishak’s time, was riddled with boardroom tussles and several curious developments, and had found itself a takeover target of various parties given its healthy cash flow. In fact, it probably holds the record of having had the most number of board changes as a result of these feuds. Ishak was a key character in this entire saga.

In the last battle over QSR and KFC in 2005-2006, it was reported that Ishak’s trusted aides had let the company slip into the hands of others. The saga came to an end when Johor state-controlled Kulim (M) Bhd emerged to take control of QSR, in a deal many perceived was orchestrated by Ishak.

Ishak’s major entry into the corporate scene started in the early 1990s when he staged a takeover of Idris Hydraulic (M) Bhd, which became a darling of retail investors during the stock market’s bull run then.

Idris Hydraulic held various timber concessions in Keningau, Sabah, which were collectively known as the Sagisan Concession, spread over 256,000ha. To leverage on its concessions, it had entered into a joint venture with Aokam Perdana Bhd in 1992 with Teh Soon Seng. Ishak forged a bond with Sarawakian Teh to win a high-profile battle against Leong Hup Holdings Bhd for control over KFC, which marked Ishak’s entry into the fried chicken retailer.


Aokam Perdana’s shares rallied in the early 1990s as investors were drawn to the notion that the company earned fat margins due to a cheap supply of logs from Idris’ concessions. Idris Hydraulic’s shares also had a phenomenal run. Stories of its planned expansion and diversification plus a healthy dose of rumour further fuelled optimism; Idris Hydraulic’s share price skyrocketed from 80 sen to RM8 within a year during the super bull-run of 1993–94.

The company was involved in a wide array of businesses, from timber concessions in far-flung places like Gabon in Africa, to hotel operations in Myanmar and multi-billion ringgit sewerage concessions at home. There was also a steady stream of talks and deals, most of which never came through, that had added to the sugar rush in the counter.

However, having reached its peak of RM8, the stock steadily began its downward spiral. Even the stock market rally of 1996-97 failed to lift the counter which appeared to have lost its lustre. Many of the promises on the company’s future plans were not delivered.

Ishak also controlled several other companies involved in retail, food and beverage, hotels and property development and had stakes in Parit Perak Bhd and hypermarket chain Carrefour.

He was also once a secretary of the Permatang Pauh Umno division, the stronghold of then deputy prime minister and now Opposition Leader Datuk Seri Anwar Ibrahim.

But like many other businessmen, the 1997-98 Asian financial crisis dealt his impressive portfolio a massive blow. He lost Idris Hydraulic in a debt-restructuring exercise. In 1998, Aokam was declared insolvent and could not pay some RM33.3mil of debt.

It was reported in 1997 that the police was looking for Teh to assist in investigations surrounding an alleged theft and misappropriation of funds from Aokam worth some RM55mil.

According to the Securities Commission (SC) website, in 2001, Ishak was convicted by the courts for disclosing false information to the SC in a proposal by Idris Hydraulic to the SC that stated he did not hold any shares in KFC. The information submitted was in connection with a proposal for the acquisition of an asset of KFC by Idris Hydraulic. Ishak pleaded guilty and was convicted on Aug 23, 2001. He was fined RM400,000, in default six months imprisonment.

In 2003, Ishak, as a director of Idris Hydraulic, was also compounded RM400,000 by the SC for misusing RM50mil of the proceeds raised from the disposal of Kewangan Bersatu Bhd. As a result of the compound, the charge was withdrawn.

His long absence from the corporate limelight ended this week following his entry into Kenmark, a homecoming of sorts as he was a shareholder in Kenmark way back in 1993. Kenmark was listed in 1997 and Ishak sold his 20% stake subsequently. He acquired a chunky 32% or 57 million shares in Kenmark early in the week, after the stock price tanked on some puzzling uncertainties. The question in most people’s minds – is he merely seizing an opportunity as an investor or is there more to the story?

By RISEN JAYASEELAN ,risen@thestar.com.my

Directors shed some light

AT a hastily arranged press conference yesterday, Kenmark Industrial Co (M) Bhd’s newly appointed directors sought to shed light on their plans to turn around the company and to explain some of the puzzling developments that had plagued the company over the last few days. Below, excerpts from the press conference with Datuk Abd Gani Yusof, Woon Wai En and Ho Soo Woon:

SBW: What is the priority at this point?
 Gani: It is to see how fast we can commence operations. We are also accessing the situation and will release statements as new developments happen.

Who gave you access to start operations? Have operations actually started?

Datuk Abd Gani ... ‘If out customers and banks support us, I believe we can turn the company around.’

 

Gani: We met key members of management and we asked them what is required to restart the production. We will take it from there. Management is supposed to do an assessment of various departments, the equipment, and the personnel required. Some new recruitment may be needed.

Are there enough raw materials, enough workers?
Ghani: I can’t answer that yet. We are meeting management on Monday to see where we stand and decide whether there is a need to purchase more raw materials or get more workers.

Where will the funds for the operations come from?
Gani: As we saw yesterday, we have enough machinery and raw material stock. There are also some debts that can be collected. Any additions will have to be reviewed as we go along.

What’s the situation with Kenmark’s creditors?
Gani: We are not under any threats from creditors. The term loan with EON Bank was taken for our factory in Port Klang. And that too, is well secured.

Have you defaulted on any of your debts?
Gani: We have not.

So why did the bank come out with this notice to secure the premises?
Gani: They had to once they found out there was no management in charge and nobody is looking after the business. Somebody has to look after the asset that is charged to the bank.

It’s been reported that key management has resigned. Is this true?
Gani: We talked to key management yesterday, and they told us none of them have resigned. Only one person resigned, and we asked her to come back and she is willing.

Doesn’t Kenmark have to meet orders from customers in time?
Gani: We only have one order to deliver by month-end, that is why as soon as we get the company working again, the business can recommence and the delivery for month-end will be met.

There is another executive director, Chang, who’s role is to take care of the plants. So how did the new directors come into the picture?
Ho: He is mainly in charge of the Vietnam plant.

Is he in communication with the new directors?
Ho: Yes he is, with the company secretary.

Does he hold the key to the factory’s production?
Ho: No.

We are trying to establish when and why was the factory shut down, and what has happened between that time. Can you comment?
Woon: We did not do a post-mortem on those events when we met with management this morning. We are not out to do a witch hunt. That can come later. We want to recommence the business as soon as possible. The idea now is to instill confidence, get the staff back so that we can deliver our orders. If we have to double time to get it done, we’ll do it.

How much damage has happened at Kenmark’s Vietnam factory? We heard there was some looting.
Ho: It is intact, because they can’t take away big machinery. The most they can take away are computers. In any case, we don’t want to speculate. We are not able to identify who the culprits are.

How soon will it take for you to come out with a regularisation plan?
Gani: I don’t know, but we have a board meeting scheduled on Monday followed by a staff meeting. We will come out with a firm plan. We know the mistake now. We know there was some communication gaps that resulted in this whole mess. We won’t let that happen again.

What are the special auditors who have been appointed tasked to do?
Gani: The terms of reference will be given upon the approval of their appointment by Bursa. Bursa will draw up what they want the special auditor to do.

Is there hostility between James Hwang’s people and this new team?
Gani: I do not know, but they voted us in yesterday.

Do you represent Datuk Ishak Ismail? He seems to have bought so many shares in Kenmark in two days. How is that possible?
Gani: Why don’t you ask him that.
Ho: I think if you look at the turnover of the volume done for Kenmark, it was quite high.

On James Hwang’s disappearance.

Are any of the four new directors in contact with Hwang?
Ho: Yes, he calls us.

What does he want?
Ho: As he explained in the letter, he is very sorry this has happened and is asking us to help him rectify the situation.

Does he feel sorry for what he has done?
Ho: Yes, as he said in the letter. I think he’s very depressed.

How could he just leave everything and run off?
Ho: I think the issue is he did not leave everything. Sometimes when you collapse, there is no such thing as “I am going to collapse, I need to get this and that done”. I was told that he collapsed due to exhaustion and lack of sleep. At one point, he was without sleep for nearly 20 days which I don’t think is humanly possible.
This is something which is unplanned, and very unfortunate for a man who thinks he is superhuman.

But he has other directors. Why didn’t they come out?
Ho: The management and operations are very tightly controlled by one man. And without this person’s direction, the other directors will not do anything.
We are here to put the situation right. Even from the board position, the executive directors are all Taiwanese, and they all report to him. There is no local executive director to liaise with the market to say what is happening. So this is a situation that we have rectified by appointing four local directors.

Why didn’t his family members alert the public as to where he was?
Ho: His family also did not know where he was. The initial reaction was that he was kidnapped.

So you believe you can make Kenmark better?
Ho: With the co-operation of everybody, we can.

But what is the main plan for Kenmark?
Woon: Too early to say as this is only our second day of being appointed.
Gani: We are here to work and to deliver. We want to get the business going on again. If we didn’t believe in that, we won’t waste our time here.

What would it take to win confidence?
Gani: Start operations again, and return to profitability.

When can this happen?
Woon: As soon as possible.
Ghani: The first task is to get the company out of PN17.
Ho: We want to get the business going on again. I think if you look at the company’s track record, it has been very solid. For this to happen overnight, it is very unfortunate. The fact that the key management staff we met today, most of them told us that they have worked from between 19-26 years. That says a lot of the company. If the key people are with us, if our customers still trust us and the bankers support us, I believe we can turn the company around.

By BK SIDHU and TEE LIN SAY, starbizweek@thestar.com.my

A bizarre run of events

An implausible series of happenings at Kenmark requires that the authorities take note and do the needful

ANYONE following the strange sequence unfolding at furniture manufacturer Kenmark Industrial Co (M) Bhd can be forgiven for thinking that there is more – much more – than meets the eye.

A disappearing managing director and senior management saw its share price collapsing and in its aftermath, a new controlling shareholder emerged, along with the re-emergence of the MD made known via a press release.

First indications of trouble came when the share price collapsed on the eve of Wesak day, on Thursday May 27 and again on Monday, May 31, there being no trading on Friday because of the public holiday. From nearly 80 sen a share, it had collapsed to about 10 sen, in just over a day, wiping out nearly nine tenths of its value.

On Monday morning – 10.10am – after one hour and 10 minutes of trading, Bursa Malaysia suspended the shares and shot a query to the company on the unusual market activity.

Back came the shocking reply on the same day: Kenmark said its independent directors, Zainabon @ Zainab Abu Bakar and Yeunh Wee Tiong, were the only ones present at an audit committee meeting that was to be held at 10.30am on May 27, incidentally, the day the share prices collapsed.

Neither managing director James Hwang nor another executive and non-executive director, all from Taiwan, could be contacted. The deputy general manager and the finance and administration manager had resigned. There was no management representation at the meeting and therefore the meeting could not proceed.

The independent directors visited the company’s premises in Port Klang on May 29 and found it sealed and the premises secured by a guard. In a further announcement the same day, the independent directors revealed that there were letters of demand for borrowings which totalled over RM60mil and that they were unable to ascertain the financial position of the company or offer any other opinion.

And the independent directors said the company would enter PN17 status requiring its operations to be regularised. They also said that the company would be unable to release its quarterly report in time and that the shares would be suspended five trading days later on June 8. This was confirmed by Bursa Malaysia. All these announcements were made on May 31.

In short, it was utter chaos and no one knew what was happening with key board members and senior management having resigned or disappeared or otherwise unable to be located. That must have been a sort of record even for the Kuala Lumpur stock exchange where strange things have sometimes been known to happen and set the stage for a sell-off.

Incredibly, with such a state of uncertainty surrounding the company, the suspension of the shares was lifted the following day, June 1. Prudence should have dictated that the suspension be maintained until more information was forthcoming so that all shareholders could act from a position of equal information.

That would have discouraged needless speculation and ensured that insiders did not have a trading advantage. If syndicates were in the market, they could have been flushed out as more information about the company came into the public domain.

On May 31 when trading was shortened by the suspension, turnover of the company’s shares had already ballooned to an incredible 72 million shares from 1.5 million shares the previous trading day, May 27 and just 55,000 shares on May 26. That 72 million represented nearly 40% of Kenmark’s issued shares, enough to tell anyone that activity was not just unusual but terribly, terribly unusual, considering the shares changed hands in just one hour and ten minutes of trading. .

If you thought turnover was high on May 31, wait for the next day when the suspension was lifted. It shot up to a massive 190 million plus, more than the entire paid-up capital of Kenmark, implying the same shares were changing hands several times. The following day it was still an incredible 138 million shares.

And then came the next shocking announcement on June 2, when the shares were suspended from trading at the awkward time of 4.43pm and remained suspended until yesterday, June 4

Suddenly, managing director Hwang was contactable. He even issued a press release. He had been sick and unconscious, he said, and his family had barred all calls. But he did not explain why his other directors could not be contacted as well. He apologised for the confusion caused.

“I have spoken with a friendly party who has already acquired a substantial stake in the company and there will be new appointments of directors, including two executive directors to manage the situation there,” he said.

He did not say when he spoke to the friendly party.

His letter to the independent directors said that four new directors should be immediately appointed to the board. They were Ho Soo Woon, Ahmed Azhar Abdullah, Woon Wai En and Datuk Abd Gani Yusuf. The last was appointed executive chairman. The independent directors then resigned.

It transpired that the friendly party and new major shareholder was Datuk Ishak Ismail, who managed to pick up some 32% from the market on June 1 and June 2. Ishak, at his own admission, was the bumiputra partner when Kenmark was listed in 1997.

Yesterday, trading continued to be active and the share closed at 29.5 sen, more than double the previous close of 11.5 sen, on a turnover of 100.8 million shares but still well below its recent price of around 80 sen.
The series of events can only be termed incredible and highly volatile. Any reasonable person who follows the case closely will have serious questions to ask at each juncture of the transactions.

It is now up to the authorities, Bursa Malaysia and the Securities Commission to investigate and establish what happened and bring those responsible to book.

At the very least, there was gross negligence in terms of corporate governance and the proper running of a company.

But things could be a lot worse than that.

A QUESTION OF BUSINESS By P. GUNASEGARAM
p.guna@thestar.com.my

Managing editor P Gunasegaram says that smoke usually indicates fire.
 
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What’s going on in Kenmark?

What’s going on in Kenmark?

OVER 20 years of sweat equity by the founders and employees of Kenmark Industrial Co (M) Bhd must have seemed to have come crashing down in just a span of a week.

The only one who has the answers to the strange and unexpected developments in the company is 59-year-old Taiwanese national Hwang Ding Kuo @ James Hwang, the company’s managing director. But his sudden “disappearance” and surprising reappearance days later with an apologetic note that he was taken ill and unconscious, has in fact, added more fodder to the unusual circumstances.

Along with Hwang, two other Taiwanese directors had also gone missing.

The uncertainty had led the share price to nose dive, wiping out some RM100mil in market value over this week.

The factory in Port Klang

The business

Kenmark is a big supplier of goods to the international supermarket chain Wal-Mart and other global stores either directly or via its agents.

The predicament in a nutshell – the company failed to submit its financial records on time; two creditor banks has asked the company to pay up; several banks and stockbroking firms have force sold the shares in the open market and its suppliers, to put it mildly are worried.

The first red flag had come from Bursa Malaysia with its query to the company on the unusual market activity, points out Rita Benoy Bushon, chief executive officer of the Minority Shareholder Watchdog Group (MSWG). Suspicions were further heightened when it failed to issue its fourth quarter results.

Rita is calling for Bursa Malaysia and the Securities Commission to conduct a thorough investigation on the matter and if wrongdoing is ascertained, to mete out the necessary penalties.

In a written reply, Bursa Malaysia said it was investigating the matter and “will pursue enforcement action for any breaches of the listing requirements.”

“Bursa Malaysia had engaged with the company’s independent directors, external auditors and officials to ascertain the state of affairs of the company immediately when the issues came to light,” it added.

In comes Ishak

And just as market observers found themselves gobsmacked by the slew of strange developments in the company, the story took on another dimension. Datuk Ishak Ismail, who made his mark in Malaysia’s corporate stage in the early 90s but had bowed out of the limelight in early 2000 following a conviction by the securities regulator, has emerged as the single largest shareholder of Kenmark after acquiring a 32% block.

Kenmark’s new directors (from left) Ho Soo Woon, Datuk Abd Gani Yusof and Woon Wai En at the press conference on Friday.

 

Ishak and Hwang are old pals. In fact, Ishak was the bumiputera shareholder of Kenmark with a 20% stake when the company was listed in 1997 but had subsequently unwound his holdings.

Ishak tells the StarBizWeek that he had received a call from Hwang on Monday night to “help out”.

Based on announcements to Bursa Malaysia, BHLB Trustee Bhd, a trust for Ishak’s family, scooped up 30 million shares or 16.83% stake in Kenmark on Tuesday. A day later, he used another vehicle, Unioncity Enterprise Ltd to acquire 27 million shares or 15.53% of Kenmark, raising his stake to 32.36%, just shy of the trigger point for a mandatory general offer.

Based on Kenmark’s share price over the two days of the acquisition, it can be assumed that he had acquired the shares at not more than 8 sen apiece. When trading on Kenmark’s shares resumed on Friday, the counter shot up to 26 sen, a 126% gain from its last traded price of 11.5 sen. This means Ishak could be sitting on a paper gain of some RM10mil.

When contacted by the StarBizWeek, Ishak who was in Baghdad, explained why he had acquired the shares: “It is a good company. I checked and there was nothing wrong with the operations. There is just some misunderstanding. What I am thinking now is how we can get the business operations re-started. I have been an investor before and this company is involved in a lot of export business. Imagine the foreign earnings it brings into Malaysia.

“There is also another aspect. About 400 jobs are at stake if the plant does not restart. So, I wanted to help bring the employees back to work. So, it is not about (grabbing) an opportunity but doing a social service. What is wrong with that?’’ he asks.

How much did he acquire the shares for? “I do not know. The purchases were done by the trustees. They make independent decisions,’’ he replies.

Still, many observers expect Ishak to exit not too long from now, pocketing some handsome capital gains. Will that happen? “It all depends on the trustees, it is not about me. This is a family trust and I am not in control of the trust. But this (Kenmark) is a good company,’’ he adds.

Lost confidence

Meanwhile, 133 Malaysian workers of the total workforce of 413 employed by Kenmark are seeking RM1.4mil in damages for being locked out of the factory at the Labour Court in Port Klang. The claims were for termination benefits, compensation in lieu of notice and unused leave.

Quite clearly, the four new directors on board have an uphill battle ahead to regain lost confidence. After their first board meeting on Thursday, they had proceeded to the factory in Port Klang but were barred from entering the premises. On Friday, they met up with the senior team.

CLICK to view graphic

“We just met key management staff and asked them what is required to restart the whole production again. We will take it from there,’’ said newly appointed executive chairman Datuk Abd Gani Yusof.

At the start

Kenmark was set up in Taiwan back in 1978. Kenmark Industrial Co Ltd, which had a factory in Nei Hu, Taipeh, set up its first overseas plant a decade later in 1988. The plant in Malaysia began operations in 1989 on a 10-acre site in Port Klang.

Hwang, the founder of the company, is said to be a very enterprising man; within a short span, the operations expanded to Singapore, Australia, London, Hong Kong, Vietnam, US and China.

The Malaysian operations was listed on Bursa Malaysia in 1997. There are two other Taiwanese directors in the company - Chen Wen-Ling and Chang Chin-Chuan. Chen owned 18.7% stake in the company, according to the company’s latest annual report. With Hwang, the Taiwanese collectively owned 46.4% of Kenmark.

A substantial amount of these shares, it is believed, were pledged to banks and several stockbroking firms for share margin financing. Given the counter’s free fall over the week, many of these shares were force sold, which led many to believe that this is how Ishak could have accumulated his interest in the company.

Domino effect

On Wednesday, after Hwang had “disappeared”, the factory in Malaysia was shut down.

Some suppliers, spooked by the developments, were believed to have taken back their supplies.

On May 27, the company’s two independent directors Zainab Abu Bakar and Yeunh Wee Tiong had called off the audit committee meeting because Hwang had failed to appear. They could not reach Hwang or the two other Taiwanese directors.

Much to their dismay, Zainab and Yuenh had found the factory sealed. They both had stepped down from the board on Thursday.

One of the creditors, EON Bank had caught wind of these developments and wasted little time engaging their solicitors to seal the company. The company received letters of demand from EON Bank and Export-Import Bank for some RM71mil.

In a statement to Bursa yesterday, Kenmark said “There were some trade bills due for payment at the end of May 2010 but due to the unfortunate situation last week ... the trade bills could not be paid and EON Bank in safeguarding their interest had then appointed the Receivers.”

As for its Vietnam plant, Kenmark said that it has learnt from Hwang that the local authorities were requested to take control of the operating premises to safeguard the assets when some looting occurred during the absence of senior management staff.’

Hell breaks loose

On Monday, the situation worsened. The staff who turned up for work that day were told to go home. On that same day, Kenmark’s independent directors had updated officials from Bursa Malaysia on these developments, which led the latter to slap the company with a PN17 status.

After two days of wild speculation, Hwang appeared with his apologetic note that he was “sorry for the confusion” and that he was “taken ill in China ... and was in a delirious state from lack of sleep and was in and out of consciousness.”

Naturally, most found the excuse hard to swallow.

“It shows total disregard of shareholders, suppliers and employees. Even if he was not around, how could anyone expect the company to run rudderless?,” asks an observer.

Those who are close to Hwang say that he largely handled the business on his own, preferring that to delegating the work to the rest at top management. “This could explain the chaos his absence had resulted in,” says a source.

The task ahead

Since then, four professional managers have been appointed to the board. They are Ho Soo Woon, Ahmed Azhar Bin Abdullah, Woon Wai En, Datuk Abd. Gani Bin Yusof. Woon was formerly with Vads Bhd while Ho has his own family business. Gani has several businesses of his own but not much is known about Ahmed.

Evidently, the team is determined to get things back to normalcy. One of the most urgent matters that needs to be addressed is that the company needs to submit the fourth quarter results. The directors have failed to get an extension of time to June 30 from Bursa Securities to submit its results as the application was submitted less than fifteen days prior to the due date for submission.

“The Directors do not have access to the accounting records as yet and shall endeavour to have the results released as soon as available,” it said in a note to Bursa Malaysia late Friday.

Time is not a luxury it has. Bursa has given Kenmark till June 8 to submit the results, failing which the trading of shares will be suspended.

Analysts expect the group’s showing in the fourth quarter to be “less impressive” as orders from the European markets have been soft due to the economic slowdown.

In the company’s latest annual report, it had stated that it will focus on strengthening the wood-based business as margins were better than the LCD television business unit which was facing stiff competition. It also expected demand for wood-based products to remain stagnant until the economy in the European and North American markets pick up.

About 78% of Kenmarks business, said the analyst is export driven; one of its largest export markets for its furniture products is Europe. As such, he expects the weakening Euro to put a damper on the company’s latest results.

For the year ended March 2009, Kenmark made a net profit of RM3.8mil on the back of RM259mil sales compared to RM10.1mil and RM308mil a year ago.

Questions left unanswered 

Without a doubt, the whole debacle has raised key corporate governance issues. The unusual market activity in the counter also needs to be prodded further by the authorities.

Was this simply a case of one thing leading to another? Or is there more to it than meets the eye?
“From a corporate governance view, it is astonishing that it has reached this stage. Some processes and checks and balances had failed. If so, how and why?” asked a peeved observer.

By B.K. SIDHU
bksidhu@thestar.com.my

 Related Stories:

Kenmark among firms that broke listing rules

Ishak – no newcomer to corporate controversy

Stock an easy buy after force-selling

Directors shed some light

A bizarre run of events 

No payment so no audit report released on Kenmark

By DANNY YAP ,danny@thestar.com.my,  Thursday September 16, 2010

PETALING JAYA: Just when it seemed that more clarity could emerge on what transpired at troubled furniture-maker Kenmark Industrial Co (M) Bhd, a new hurdle has emerged.

Reliable sources said that while the special audit report on the company had been completed by accounting firm UHY Malaysia, the report had yet to be released to the relevant regulatory bodies because no one had paid UHY.

When contacted, an official from UHY’s forensic accounting division confirmed that it had yet to receive payment for its professional audit fees for the special report from Kenmark.

The situation poses a dilemma for the regulators as it is only expected that any firm carrying out an audit will need secure payment for work done on such a report.

To recap, UHY was directed and endorsed by Bursa Malaysia to conduct the special audit report on Kenmark back in July to determine if there had been any accounting irregularities, potential breaches of rules and regulations that contributed to the current RM150mil recorded losses.

Moreover, the special audit report was conducted to find out if there were any more losses that the new management had to deal with and debt exposure that shareholders should know.

Bursa Malaysia had confirmed to StarBiz that it had so far not received the special audit report on Kenmark.
A senior auditor of a local accounting firm said professional fees for scope of work that had been identified and endorsed by the regulators should not be disputed, especially when the work had been completed.

“If payment is not made to the accounting firm conducting the special audit report it would be difficult to know the actual financial position of Kenmark and on technical grounds and the lack of pertinent information (on the company’s past undertakings and accounts), it is likely the company would get away with any missdeeds because of the lack of evidence.”

For latest Bursa Malaysia indices, charts and other information click here

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