KUALA LUMPUR: Scomi Energy Services Bhd has begun an investigation into the RM64.33 million lent to its parent Scomi Group Bhd, claiming the advances were made without its board of directors’ approval.
In a filing with Bursa Malaysia, Scomi Energy said the advances had dragged it into deeper financial trouble as Scomi Group, which holds a 65.64 per cent stake in SESB, had not been able to repay the outstanding amount.
“Arising from the preliminary report from the solicitors in November 2018, the board is initiating an investigative review of the transactions constituting the advances to be conducted by a third-party firm of independent auditors,” Scomi Energy added.
The company said it was reviewing the management structure and terminating the shared services arrangement with the parent company except for certain critical functions.
The money lent was for a two-year period from June 2016 till June 2018, Scomi Energy noted.
The company said it had been in constant negotiation with Scomi Group to pursue the repayment of the total sum advanced.
“Subsequent to the affected period, Scomi Group has made repayment of RM6.8 million. However, there is a risk that the cash flow of the company and the financial ability of the company to meet its financial obligations will be affected in the event Scomi Group is not able to settle the advances.
“In such event, the company is considering all options available to it to ensure recovery of the advances,” Scomi Energy said.
The company noted that the advances had also been made without prior approval by its audit committee.
The committes was still unable to provide a statement as to whether the provisions were fair and reasonable or to the detriment of the company and its shareholders, Scomi Energy added.
The advances had been disclosed in Scome Energy’s audited financial statements for the financial years ended March 31, 2017 (FY17) and FY18. It was stated as amounts due from ultimate holding company.