SGX reprimands Medi-Flex Limited for breach of listing rules

The exchange also chides former directors Tu Ah Kim and Hew Yew Fook for authorizing disbursements of company’s funds to entities and accounts for the benefit of Mr. Tu.

Singapore Exchange (the “Exchange”) reprimands Medi-Flex Limited (“Medi-Flex”) and two of its former directors (the “Former Directors”):

(a) Mr Tu Ah Kim - Founded the business in 1999 and was appointed Managing Director from December 2003 to March 2007. He then stepped down as Managing Director but remained as Executive Director until his resignation in August 2007; and

(b) Mr Hew Yew Fook - Executive Director from September 2004 to August 2007; for breaches of Chapter 9 of the Listing Rules and failures of corporate governance. These Former Directors and management had authorised disbursements of company’s funds to entities and accounts for the benefit of Mr Tu Ah Kim.

Serious irregularities were highlighted in the findings of the Report by Ernst & Young Advisory Services Sdn Bhd (“EYAS Report”) dated 8 July 2009. Following detailed assessments of the EYAS Report, the Exchange is of the view that the Former Directors failed to comply with Listing Rule 103(5) to act in the interests of shareholders as a whole. In addition, they have not demonstrated the qualities and standards expected of directors and the management of SGX listed companies, as required under Listing Rules 210(5)(b) and 720, as mentioned in an SGX report.

Apart from the Former Directors, the Exchange also noted the possible involvement of the following former employees (“Relevant Employees”) of Medi-Flex or its subsidiary, Flexitech Sdn Bhd (“Flexitech”):

(a) Pang Wei Pin - Group Accountant from May 2004 to May 2007
(b) Liau Lee Hoon - Accounts Assistant of Flexitech from 10 May 2003 to 13 August 2006
(c) Wong Chew Yeh - Assistant Accountant of Flexitech from 24 August 2006 to 15 May 2007
(d) Lim Lee Peng - Account Clerk of Flexitech from 20 October 2003 to 21 August 2006

Based on the findings of the EYAS Report, the Company has also failed in corporate governance practices to safeguard the interests of the Company and shareholders.

Exchange’s Directions
The Exchange has directed Medi-Flex to lodge a report against the Former Directors with the
Commercial Affairs Department (“CAD”) in Singapore and the relevant authorities in Malaysia on the serious irregularities highlighted in the findings of the EYAS Report.

The Exchange noted that the Company has sought to improve its internal controls and corporate governance practices since the identification of the irregularities.

SGX-listed companies are advised to consult the Exchange before they appoint any of the Former Directors or Relevant Employees as a director or member of management.

The Exchange will be referring this case to the CAD.

Public Disclosure of Executive Summary of EYAS Report
On 8 July 2009, the Company announced that its subsidiary, Flexitech Sdn Bhd (“Flexitech”), had engaged Ernst & Young Advisory Services Sdn Bhd (“EYAS”) to perform certain agreed upon procedures in connection with the purchase of factory equipment by Flexitech in 2005 (“2005 Equipment”). In connection with this exercise, Henry Butcher Malaysia Sdn Bhd (“Henry Butcher”) was appointed to conduct a valuation of the 2005 Equipment.

On 18 March 2011, the Company released the Executive Summary of the EYAS Report as directed by SGX. The findings in the EYAS Report revealed the failures of corporate governance and breaches of Listing Rules 720 and 906.

The Company has announced on 18 March 2011 that, based on findings of the EYAS Report, it has lodged a report with the Singaporean police against Mr Tu Ah Kim in connection with offences involving fraud and dishonesty.