Patrick Chew Hwa Kang, former CEO of Midas Holdings, has been charged on Feb 10 under the Companies Act for “failing to use reasonable diligence in the discharge of his duties as a director of Midas.”
If convicted, Chew faces a jail term of up to 12 months or a fine of up to $5,000.
Midas Holdings was a popular stock, with investors taken in by its business of building parts used by China’s fast-growing high-speed rail industry.
However, the company soon lose control over its operating subsidiaries based in China, with reports surfacing in early 2018 on a web of loans and guarantees have been made involving Midas’ chairman cum largest shareholder Chen Wei Ping and parties related to him.
The deals came to light only after lawsuits commenced in China against Midas’ subsidiaries from creditors.
In an unprecedented move, Chen was removed from his position by the Singapore Exchange. The company, which was traded in Hong Kong as well, is being liquidated.
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In a statement by the Singapore Police, the charge relates to Chew’s failure to exercise reasonable supervision over the financial affairs of Midas’ subsidiaries, namely Jilin Midas Aluminium Industries and Luoyang Midas Aluminium Industries.
“Chew had allegedly ceded control of his legal representative stamps for JMA and LYMA, which were then used to enter into loans or stand as loan guarantors in the name of the two subsidiaries.
The value of these loans and guarantees amounted to RMB 159.5 million ($32.7 million) and RMB 264.5 million respectively.
“Midas subsequently announced their discovery of these loans and guarantees, entered into between 2015 and 2017, in February 2018,” adds the police.
