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11-04-2012, 06:05 PM
Business Times - 11 Apr 2012
Sinotel cheated of 105m yuan by three employees
By LYNETTE KHOO
THREE employees at Sinotel Technologies have cheated the China-based telecommunications company of 105.4 million yuan (S$21 million) through unauthorised fictitious purchases.
The funds were purportedly used to pay for 4G R&D equipment and software at one of the Chinese subsidiaries, Xbell Union Communication (Beijing) Co Ltd, from June to December last year.
The fraudulent purchases were made by the subsidiary's purchasing manager Wang Yuxiao and two accomplices in the group's finance department, whose identities were not revealed.
Sinotel will be able to provide more details after investigations by the local PRC public security bureau are completed, Sinotel spokesman Ben Ng said.
Mr Wang is being detained while the accomplices are assisting in the investigation, based on the company's regulatory filing yesterday.
The three employees have been officially dismissed, Mr Ng said.
Sinotel has so far recovered about 16.4 million yuan and expects to recover the balance of 89 million yuan by April 30 since the Chinese public security bureau has managed to determine the whereabouts of this balance amount.
Based on the recoverability of the balance, the company said it will assess if there is a need for any impairment loss or allowance for any uncollectible amount.
The board has assured that 'this is an isolated incident confined solely to the PRC subsidiary, and that none of the group's other subsidiaries and entities are affected by this incident', the group said.
It added that this incident will not have any adverse material impact on its cash balance, assets or financial position except for certain reclassifications in its financial statement.
Company auditors Baker Tilly TFW LLP first raised the red flag on the unauthorised purchases last month when they could not complete certain audit procedures on these transactions, prompting an internal probe that lasted a week from end-March to April 7.
Sinotel, which requested a share trading halt on Monday, yesterday sought the resumption of trading today.
Incorporated in Singapore, Sinotel's major customers include China Mobile, China Unicom and China Telecom. The group also has depository receipts traded on the US over-the- counter (OTC) market. Based on unaudited financial statements, Sinotel's net assets stood at 987.3 million yuan on Dec 31, 2011.
The group's audit committee has put in place measures to safeguard the assets and strengthen internal processes, it said.
It has temporarily ceased all further purchase orders for 4G R&D equipment and software, and will undertake a detailed review of its internal controls procedure. Sinotel is also seeking legal advice to protect the interests of the company.
As the auditors need to perform additional procedures and tests, there may be a delay in finalising the annual report for fiscal 2011 and convening of the annual general meeting, the group said.
Sinotel will be applying to the Singapore Exchange (SGX) and the Accounting and Corporate Regulatory Authority (ACRA) for approvals of an extension beyond the end of April to hold its AGM.
Sinotel cheated of 105m yuan by three employees
By LYNETTE KHOO
THREE employees at Sinotel Technologies have cheated the China-based telecommunications company of 105.4 million yuan (S$21 million) through unauthorised fictitious purchases.
The funds were purportedly used to pay for 4G R&D equipment and software at one of the Chinese subsidiaries, Xbell Union Communication (Beijing) Co Ltd, from June to December last year.
The fraudulent purchases were made by the subsidiary's purchasing manager Wang Yuxiao and two accomplices in the group's finance department, whose identities were not revealed.
Sinotel will be able to provide more details after investigations by the local PRC public security bureau are completed, Sinotel spokesman Ben Ng said.
Mr Wang is being detained while the accomplices are assisting in the investigation, based on the company's regulatory filing yesterday.
The three employees have been officially dismissed, Mr Ng said.
Sinotel has so far recovered about 16.4 million yuan and expects to recover the balance of 89 million yuan by April 30 since the Chinese public security bureau has managed to determine the whereabouts of this balance amount.
Based on the recoverability of the balance, the company said it will assess if there is a need for any impairment loss or allowance for any uncollectible amount.
The board has assured that 'this is an isolated incident confined solely to the PRC subsidiary, and that none of the group's other subsidiaries and entities are affected by this incident', the group said.
It added that this incident will not have any adverse material impact on its cash balance, assets or financial position except for certain reclassifications in its financial statement.
Company auditors Baker Tilly TFW LLP first raised the red flag on the unauthorised purchases last month when they could not complete certain audit procedures on these transactions, prompting an internal probe that lasted a week from end-March to April 7.
Sinotel, which requested a share trading halt on Monday, yesterday sought the resumption of trading today.
Incorporated in Singapore, Sinotel's major customers include China Mobile, China Unicom and China Telecom. The group also has depository receipts traded on the US over-the- counter (OTC) market. Based on unaudited financial statements, Sinotel's net assets stood at 987.3 million yuan on Dec 31, 2011.
The group's audit committee has put in place measures to safeguard the assets and strengthen internal processes, it said.
It has temporarily ceased all further purchase orders for 4G R&D equipment and software, and will undertake a detailed review of its internal controls procedure. Sinotel is also seeking legal advice to protect the interests of the company.
As the auditors need to perform additional procedures and tests, there may be a delay in finalising the annual report for fiscal 2011 and convening of the annual general meeting, the group said.
Sinotel will be applying to the Singapore Exchange (SGX) and the Accounting and Corporate Regulatory Authority (ACRA) for approvals of an extension beyond the end of April to hold its AGM.
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