SINGAPORE – Several directors of embattled education services provider Raffles Education Corporation (REC), including chief executive Chew Hua Seng and his wife, Ms Doris Chung Gim Lian, are under investigation by the authorities for suspected breach of disclosure requirements under Section 203 of the Securities and Futures Act.
They have surrendered their passports to the authorities.
The Monetary Authority of Singapore and the Commercial Affairs Department on Tuesday (Oct 19) ordered REC to surrender documents relating to loans extended by Affin Bank to its Malaysian subsidiaries – Raffles K12 and Raffles Iskandar – in connection with the investigation.
Raffles K12 developed the Raffles American School, while Raffles Iskandar established Raffles University, which are both in Johor, Malaysia.
Several REC directors have been interviewed by the authorities here in relation to the investigations, REC announced on Thursday in a filing on the Singapore Exchange.
They are Mr Chew, lead independent non-executive director Lim How Teck, non-independent non-executive director Joseph He Jun, independent non-executive director Ng Kwan Meng, and independent non-executive director Gan Hui Tin.
Ms Chung, a director and key management executive of Raffles K12 and Raffles Iskandar, was also interviewed.
“The (directors) were notified that a possible offence under Section 203 of the Securities and Futures Act has been committed, and as part of the usual procedure, they have surrendered their passports to the authorities,” said REC.
No further conditions or restrictions were imposed on them as at Thursday, and none of them have been placed on bail, arrested or charged with any offence, it added.
The directors are cooperating with the authorities on the investigations and will inform the company of subsequent developments, said REC, adding that it will make further announcements as and when there are material developments.
The directors will continue to fulfil their roles in the interim, it said, highlighting that material information relating to the claim by Affin Bank has been disclosed in various announcements from July to September.
“The company believes that the investigations will not compromise the ability of the directors to discharge their duties as directors of the company.”
Affin Bank in Malaysia had on May 27 filed writs against REC’s two Malaysian units and the company, demanding immediate repayment of a total outstanding amount of RM410 million (S$133 million).
In its filing, REC also addressed allegations made in an Oct 16 letter by substantial shareholder Oei Hong Leong.
Mr Oei alleged that Mr Chew had “caused the company to hire all adult members of his family at high salaries”.
He also claimed that Ms Chung received almost $500,000 last year, and that $5 million was paid to Mr Chew in the form of salaries, bonuses and profit-sharing.
Mr Oei added that Mr Chew also received various perks such as family holiday expenses paid by REC in the name of business.
REC said the allegations are made “without evidence and the company considers them to be baseless and misleading”.
REC said it wrote to Mr Oei on Wednesday to request an explanation of his bases for making the allegations, including the identities of Mr Chew’s “unofficial” family members alleged to be hired by the group.
Alternatively, Mr Oei was invited “to retract such allegations”, said REC.
REC highlighted findings from an audited statement that the total emoluments – which includes all fees, salary, bonus, profit-sharing and other benefits – payable to Mr Chew was $2.89 million, and not $5 million.
It noted that the total emoluments payable to Ms Chung was $372,240, and not nearly $500,000 as asserted by Mr Oei.
REC referred to an article by The Straits Times on Monday which reported that REC shares dropped 26 per cent in the wake of the Oct 16 letter. REC noted that there is no direct correlation between the letter and trading of its shares.
The company called for a trading halt on Tuesday morning.
REC said Mr Oei notified it on Tuesday that he had sold approximately 38.9 million shares on Monday, representing 74.38 per cent of the total volume of shares traded that day. He received $2.7 million for the sale.
REC advised shareholders to exercise caution when dealing in its shares and “refrain from taking any action in respect of their investments which may be prejudicial to their interests”.
“In the event that shareholders wish to deal in the shares of the company, they should seek their own professional advice and consult with their own stockbrokers.”