Saturday, April 6, 2013

Judicial managers suspect mismanagement at firm

The Straits Times  |  06 Apr 2013 11:40 PM

Apparent acts of mismanagement have been uncovered at Poh Lian Construction after it sank into a multimillion-dollar black hole, a court heard yesterday.

These acts will be investigated further, said Mr Tan Chuan Thye, representing Poh Lian's then interim judicial managers, Mr Tam Chee Chong and Mr Andrew Grimmett.

The two were appointed judicial managers at the High Court hearing.

"The interim judicial managers discovered that there appears to have been various acts of mismanagement. But investigations are still in the early stages and they will need more time," Mr Tan said.

The two men filed a 109-page affidavit with the court on Tuesday, detailing some of the alleged mismanagement.

It referred to two former Poh Lian employees: former senior manager for operations Thomas Ng and ex-chairman and executive director Wisanggeni Lauw.

It said Mr Ng was in charge of engaging labour suppliers to secure foreign workers for the Goodwood Residence project.

He agreed to pay the workers an hourly rate regardless of the work done, contrary to industry practice.

This payment scheme was in place for 11 months from March 2012 to February 2013.
In this period, the $21.9 million paid to labour suppliers alone exceeded the total profit Poh Lian could have made on the project - about $9.2 million.

The document stated: "There were suggestions that Mr Ng ignored internal costing analysis and reviews on the question of the engagement of the labour suppliers."

It was also stated that Mr Ng reported directly to Mr Lauw instead of his immediate superior, then chief operating officer Leong Chee Keng.

Investigations are at a preliminary stage and the judicial managers may decide, with Poh Lian's creditors, to take legal action against the firm's previous management, said the court papers.

In an affidavit filed last month, one of Poh Lian's directors, Mr Peh Pit Tat, said he was shocked to find out last October that three projects were incurring substantial losses.

The condos were Sophia Residence, Goodwood Residence and Bishopsgate Residences.

Mr Peh said Poh Lian had submitted tenders at uncompetitive prices.

"In the Sophia (Residence) project, the previous management failed to take into account the additional costs that would be payable to the sub-contractors for prolonged excavation works at the development site.

Mr Peh also said that Mr Lauw had resigned from the company in January, while Mr Ng was fired in the same month.

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