Lai Seng Kwoon
Former independent director of China Sky Chemical Fibre, Lai Seng Kwoon , has been arrested by the white-collar crime unit and his passport has been impounded.
The Straits Times reported that accountant Lai was arrested this week at the Commercial Affairs Department’s (CAD) offices and is out on bail. The reason for his arrest is not known.
Mr. Lai was the Chairman of the Audit Committee (AC) of China Sky. While he was the AC chairman his accounting firm, SK Lai & Co, provided significant accounting-related services to China Sky. SK Lai was paid some $112,000 in 2008, $183,000 in 2009 and $72,000 in 2010. The size of the amounts show that the accounting firm had provided substantial amount of services in assisting in the review of the company’s internal, accounting and reporting controls, reviewing quarterly financial statements and results announcements, and providing consultancy and advisory services for various accounting procedures, including the consolidation of a subsidiary. There seems to be a conflict between his role as AC chairman and his firm’s role in providing accounting-related services.
In a report published in The Business Times on July 27, 2009, Mr Lai was referred to as ‘Mr S-chips’. The following is a quote from that report:
‘I’m an Independent Director (ID) who, I think, doesn’t have a very glorious record,’ Mr Lai said. ‘I have gone through an S-chip that has fraud, an S-chip that is experiencing bond and liquidity issues, I have gone through an S-chip that has a controlling shareholder pledging all his shares, and I have an S-chip with missing accounting records.
‘Of course, given my experience, I would want to get onto more boards.’
This is the latest development in China Sky after it refused to submit to a special audit requested by the Singapore Exchange (SGX).
Chinese companies listed on Singapore Stock Exchange, like China Sky, are known as S-chips. Here is an interesting article which you may like to read, if you have not already read it: Confession of a S-chip CEO