October 22, 2007
SembCorp Marine fires finance director
Singapore's SembCorp Marine today announced that Mr Wee Sing Guan (Director, Group Finance) has been relieved of his duties at the SCM Group and has resigned his directorships in the subsidiaries of SCM, including Jurong Shipyard Pte Ltd. (JSPL).
According to a SembCorp Marine stock exchange announcement, Mr. Wee "entered into various unauthorized foreign exchange transactions" for the account of wholly owned SembCorp Marine subsidiary JSPL and misled JSPL and SCM in relation to the unauthorized transactions.
SembCorp Marine says steps have been taken to prevent the entry of any further unauthorizsed transactions.
"In light of the reasonable prospect of legal proceedings and to enable SCM and JSPL to obtain legal advice with respect to possible claims, as well as any claims by JSPL, in relation to the unauthorized transactions, SCM and JSPL have appointed Drew & Napier LLC jointly with Ernst & Young to investigate the unauthorized transactions, their nature and the full circumstances under which the unauthorized transactions came to be transacted and to work with a special committee of the SCM Board," says SembCorp Marine.
It says that based on information from the various banks the estimated unrealized loss to JSPL arising from the foreign exchange transactions is in the region of US$165 million if the transactions are valid. This does not include the sum of approximately US$83 million which JSPL paid to one of the banks before the unauthorized transactions were discovered.
More information is being sought, but SCM believes that this represents a substantial part of the unrealized loss, if the transactions are valid. SCM and JSPL are investigating and seeking advice on which of these transactions are unauthorized and whether monies already paid can be recovered.
SCM does not expect that this will have any impact on JSPL's operations, declaring: "It is business as usual."
The extent of the impact on SCM's results for FY2007 will depend on the movements of the exchange rates, outcome of the investigations and disputes, if any.
In a separate subsequent announcement SembCorp Marine said that its wholly-owned subsidiary SCM Investment Holdings Pte Ltd had sold 39 million ordinary shares in Cosco Corporation (Singapore) Ltd. for an aggregate net consideration of Singapore $272.2 million (about US$186 million). On completion of the sale, the SembCorp Marine Group still holds 111,400,000 Cosco shares which represent 4.98% of the share capital of Cosco. The sale will result in a gain of approximately S$230 million (about US$157.25 million). This will be treated as a one-off gain and will be taken in the financial year ending December 31, 2007.