SDAI : 5TI 0%, formerly known as Kitchen Culture, will seek further updates on payroll irregularities concerning two former employees, and reprimand its former interim chief executive for his role in an unauthorised transaction.

In a bourse filing on Wednesday (Nov 22), the company gave an update on the actions it will take in response to findings highlighted in an independent special audit report in July.

The audit found that the company’s board had in 2021 lodged a police report over suspected payroll irregularities. This concerned two former employees of its key subsidiary KHL Marketing Asia-Pacific, and involved a sum of around S$520,000.

The auditor said it was unable to independently verify whether the two former employees were meaningfully employed by the company during their period of employment.

In response, SDAI said it will write to BDO Advisory – the liquidators of KHL Marketing – to understand if they will take further steps on the matter, and if SDAI is entitled to monetary recovery as KHL Marketing’s shareholder and creditor.

If KHL Marketing contravened the Employment of Foreign Manpower Act as a result of the irregularities and is liable to be fined, SDAI also hopes to understand whether BDO will seek an indemnity from persons deemed responsible.

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In the report, the auditor also uncovered a total of five agreements that the company’s former interim CEO Lincoln Teo Choong Han had executed, on behalf of the company’s wholly owned subsidiary KC Technologies, without obtaining approval from the board.

Under the agreements, KC Technologies and Sino Allied were jointly set up with a structured finance scheme for one year to support Amazon’s e-commerce merchants with their collective procurements, which was not in the group’s ordinary course of business, the auditor said.

SDAI said it will reprimand Teo for his role in the lapses in corporate governance for any and all claims that might be brought or threatened by any of the counterparties.

It will also ask for further information on whether there are other occasions where Teo entered into transactions on behalf of the company without full board approval.

The kitchen solutions company formerly known as Kitchen Culture adopted the counter name SDAI effective Wednesday, after it was approved at the company’s extraordinary general meeting held last Friday.

Trading of shares under its new counter name remains suspended.

The suspension had been in place since July 2021 due to a variety of issues, including non-compliance and systemic internal failures.