Oilcorp external auditors removed

BY JAGDEV SINGH SIDHU and LOONG TSE MIN

Appointment of new auditors postponed

KUALA LUMPUR: Shareholders of Oilcorp Bhd in a near unanimous vote yesterday booted out the existing external auditors. The shareholders were unhappy on finding out the company faced the prospect of delisting after its annual accounts were accompanied with a disclaimer report.

Plans to appoint Messrs Horwath to replace Baker Tilly Monteiro Heng were scuttled after the former declined the appointment, citing regulatory process, which then forced Oilcorp to adjourn the EGM for shareholders to vote on Horwath's appointment to Aug 12.

“The company wishes to inform that Messrs Baker Tilly Monteiro Heng has been removed as auditors of the company with effect from July 21, 2008,'' Oilcorp said in a statement yesterday.

“The vacancy created by the removal of Messrs Baker Tilly Monteiro Heng, however, has yet to be filled pending the issuance of the necessary professional clearance by Messrs Baker Tilly Monteiro Heng and the consent to act from Messrs Horwath.''

At the Oilcorp EGM (From right) chairman Mohamed Taib Mahmood, group MD Sunny Ng Huat Tian and executive director Ang Choon Hug.

It said the appointment of Horwath to fill the vacancy would be considered at the EGM on Aug 12.

Horwath will also be asked to audit the company's 2007 financial accounts again.

The dispute stems over the validity of a RM110mil contract from Plant Biofuels Corp Sdn Bhd to Oilcorp subsidiary Oil-Line Engineering & Associates Sdn Bhd. Oilcorp hired Horwath to conduct an investigative review of the contract value.

In a controlled and civil EGM called to remove Baker Tilly Monteiro Heng as auditors, shareholders voted 99.9% in favour to do so.

Horwath, which had earlier announced it would not take over as external auditor of Oilcorp, citing the absence of professional consent from Baker Tilly Monteiro Heng, then reiterated its decision.

Stating advice from the Malaysian Institute of Accountants, Howarth said a new external accountant must obtain the consent from the auditor it was replacing before it could take over.

“Up to this morning, Baker Tilly Monteiro Heng has not given its professional clearance,'' said Horwath partner Lee Kok Wai.

He said Horwath had written to Baker Tilly Monteiro Heng, which had 14 days to reply. That expires today and failure to give consent will result in Baker Tilly Monteiro Heng being given a further 14 days to do so.

The call to remove Baker Tilly Monteiro Heng was made by the single largest shareholder of the company, Pramaddun Holdings Sdn Bhd.

During the EGM, presentations by Baker Tilly Monteiro Heng, Oilcorp and Howarth were made to shareholders to help shed light on the dispute between the auditors and management.

After the EGM, Oilcorp directors insisted there was no element of fraud in the entire event.

“The whole issue stems from a flow of documentation,'' said director Eng Chip Jin, who is also chairman of the firm's audit committee.

“But the weakness does not cast doubt on the validity of the contract.''

The company said invoices for the biodiesel project was now RM105mil and collection of money from Plant Biofuels Corp was more than RM85mil.

The company said it had learnt a lesson from the entire episode. It now realised the consequences of putting a disclaimer report with its annual accounts and said it would now try to complete its accounts earlier, probably in February, instead of leaving it to the last minute.

Oilcorp group managing director Sunny Ng Huat Tian said there had been a financial impact from the audit impasse as its bankers were edgy since the disclaimer, adding that it might have affected the securing of new contracts.

Source The Star 22.7.2008