Bursa reprimands LFE, fines 4 of its directors

BURSA Malaysia (1818)has publicly reprimanded LFE Corp Bhd and fined four of its directors a total of RM468,000 for breaching listing requirements.It also directed the company to ensure all its directors and relevant personnel attend a training programme on listing requirement compliance, particularly regarding financial statements.

In a statement yesterday, Bursa said LFE Corp managing director Lew Mew Choi, executive directors Liew Kiam Woon and Chin Soong Jin (who resigned on December 31 last year), and non-independent and non-executive director Alan Rajendram Jaya Rajendram were fined RM117,000 each.

The four and several other directors including Chung Tack Soon, Tong Hock Sen (resigned on January 16 this year), Kee Ju-Hun (resigned on January 16 this year) and Liew Meow Nyean (non-independent and non-executive director) received a public reprimand.

Bursa said the penalties on LFE and the directors were imposed after the completion of due process and taking into consideration all facts and circumstances of the matter including the financial statements delayed, the length of delay and the roles and responsibilities of each director in the company, particularly in respect of the maintenance and preparation of financial statements.

LFE had failed to submit the firm's annual audited accounts and annual report for the financial year ended December 31 2007 on or before June 30 last year. The company only submitted its audited accounts six months after the deadline, while its annual report was submitted after about five months.

LFE had also failed to submit the company's quarterly report for the financial year ended March 31 and June 30 2008 on or before May 31 and August 31 2008, respectively. Both reports were only submitted on October 30 last year.

The delay in the submission of the annual audited accounts 2007, which caused the subsequent delay in the submission of the annual report 2007 and the first two quarterly reports 2008, was due to its external auditors' concerns on the authenticity of the new transactions undertaken by the company's subsidiary, LFE International Ltd (LFEI) in that financial year.

LFEI's trading transactions contributed significantly to the revenue and profit of the LFE Group for the 2007 financial year, which were RM126.4 million or about half of the unaudited revenue of RM257.4 million and net profit of RM6.2 million.

Bursa said the audit concerns on LFEI's trading transactions were only disclosed when the annual audited accounts 2007 was submitted on October 30 last year and the external auditors had issued a qualified opinion on the recoverability of RM24.1 million owing to LFE by Rajendram, arising from LFEI's transactions, and RM4.3 million due to the company by LFEI.

It said the company's Board of Directors decided not to recognise the RM126.4 million revenue, RM119.1 million cost of sales and RM6.2 million profit generated from LFEI's trading transactions."All the directors were aware of the new trading transactions undertaken by LFEI in the financial year 2007 and the materiality of such transaction towards LFE's revenue from the beginning when the contract was secured.

"However, the directors have failed to demonstrate adequate efforts taken to discharge their duties, particularly in respect of the oversight of LFEI and ensure adequate risk management and controls in respect of the trading transactions of LFEI to facilitate the audit to enable timely preparation and submission of the financial statements," Bursa said