85.7 Million Account Irregularity Confirmed In Xian Leng

Let's see.

On 5 Oct 2011 it was published that Special Audit To Be Carried Out On Xian Leng!

Xian Leng announced that there might be some financial irregularities involving some RM17.36 million in capital expenditure.

Then on 11 Jan 2012, Xian Leng announced its quarterly earnings and I posted Xian Leng's 52 Million Ringgit Loss Provision!!!

Two things were highlighted:

1. RM11.39 million impairment loss was provided for a subsidiary involved in the breeding of other tropical fish, such as guppy, platy fish and cat fish
2. RM52.11 million of impairment loss was provided for in respect of the value of fish ponds incurred by another subsidiary involved in the breeding of Arowana fishes.

A 11.39 million for the breeding of tropical fish such as guppy, platy fish and cat fish?????"

Yesterday, on the Edge Malaysia: Xian Leng MD resigns over accounting issue

• Xian Leng MD resigns over accounting issue
  Written by Kamarul Azhar
  Wednesday, 04 April 2012 14:25
  
  PETALING JAYA: Ng Huan Tong, managing director of ornamental fish breeder Xian Leng Holdings Bhd, resigned yesterday amid accounting irregularities in the group’s books that could reach RM90.7 million.
  According to Xian Leng’s filing with Bursa Malaysia yesterday, Ng, the group’s majority shareholder, has resigned from the top post as the audit investigation of the group’s capital expenditure is in the final stages.
  
  “Coupled with the deteriorating financial results of the group for the past few years, I believe it would be prudent for me to relinquish my position as the managing director of Xian Leng voluntarily of my own accord,” said Ng.
  
  He has also resigned from Xian Leng’s remuneration committee and as chairman of the group’s employees share option scheme (Esos).
  
  Ng and his wife Lim Wan Hong hold 46.5% of Xian Leng’s paid-up capital. It is believed that Ng and Lim hold more than 51% of Xian Leng via friendly parties.
  Replacing him in both positions is Kuan Kai Seng, a 38-year-old chartered accountant, who gained experience in carrying out statutory audits on private and public limited companies when he was with Ernst & Young between 1999 and 2002.
  
  According to an observer, the group’s board of directors has been trying to oust Ng as the MD since the accounting issue was discovered, but failed due to his majority ownership of Xian Leng.
  
  The Edge weekly reported last weekend that a draft report by PricewaterhouseCoopers Advisory Services Sdn Bhd (PwCAS) alleged that Xian Leng cannot account for the RM90.7 million in capital expenditure to build various fish farms between FY05 and FY08.
  
  It was reported that Xian Leng’s board of directors are aware of the “missing” sum, but it did not give consent for the expenditure.
  
  Xian Leng has provided for the amount in its accounts, which contributed to losses of RM56.23 million in FY12 ended Jan 31, on RM14.94 million in revenue.
  
  Four contractors were allegedly awarded jobs without tenders or competitive bids, and three out of the four were not registered businesses when they issued invoices to Xian Leng, The Edge reported.
  
  The draft also revealed that all four contractors were sole proprietors and secured RM85.9 million worth of jobs out of the RM90.7 million unaccounted for capex. The rest of the amount was shared among 52 other contractors.
  
  On March 30, Xian Leng announced to Bursa Malaysia that the expected completion of a special audit by PwC had been delayed to end-April from end-March this year.
  
  In October 2011, the group announced that “there are possibly some financial irregularities pertaining to capital expenditure of RM17.36 million as stated in the company’s financial statements, the nature and extent of which cannot be accurately determined at this juncture”.
  
  In February, Datuk Chin Seak Huat emerged as a substantial shareholder with 3.65 million shares or 5.05% equity interest. He has since increased his shareholding to 5.36% or 3.87 million shares.

Well the Edge Malaysia just published another article on Xian Leng: PwC : Irregularities in Xian Leng’s accounts

• PwC : Irregularities in Xian Leng’s accounts
  Written by Chong Jin Hun of theedgemalaysia.com
  Thursday, 05 April 2012 18:46
  
  KUALA LUMPUR (April 5) : The special audit on XIAN LENG HOLDINGS BHD [] revealed financial irregularities in its fish farm development capital expenditure amounting to RM90.7 million of which a total of RM85.7 million was disbursed under "questionable circumstances".
  
  In a statement to the exchange on Thursday, Xian Leng which undertakes commercial breeding of ornamental fish, said the auditor PricewaterhouseCoopers Advisory Services Sdn Bhd (PwC), had disclosed that there was lack of evidence that the RM85.7 million portion was paid to four contractors, as indicated in Xian Leng's records during financial years 2005 to 2008.
  
  According to the audit findings, the cheque payments were authorised by on Xian Leng managing director Ng Huan Tong, while signatories to the cheques were two former board members: Chua Chong Seng and Lim Wan Hong.
  
  Lim is the spouse of Ng, who had voluntarily resigned from his position last Tuesday as PwC finalised its investigation. Xian Leng said its board is deliberating on the next course of action, which may include lodging a police report.

WOW!