Multi-Chem

[BlueKelah]

I am curious on the gifting to an employee of a vendor. I cannot imagine big cybesecurity firms eg Palo Alto to allow that. It has to be big enough vendor coz it is $2m in gifts.

Is this vendor a middleman company? meaning direct reseller of license. Multichem is the customer of this reseller?

Capitaland vouchers......remind me of the former TW president wife also receive a lot of SOGO vouchers.

Not vested. got follow a bit on company due to high div yield.

This vendor likely to be US company with a regional branch in singapore.
2m translate into about 2000 max value vouchers. (max 1 voucher is 1k)
but unlikely local branch have so many employees, which also means that single employee likely did not benefit directly from the money.
[[there is also Ecapitaland corporate vouchers. note that longest duration is 1 year expiry for the vouchers and the use of any vouchers is recorded in capitaland system over past 2 years. ]]

so likely when the vendor management or staff visit singapore, they can have their retail/dining/entertainment taken care of for next few years. Multichem can probably written this off as entertainment expenses which is totally legal.

I would think cybersecurity is a pretty high end high margin low asset business and these guys are just raking in the money without doing much programming. Only the engineers doing the deployment and staff training are doing most of the routine work lol.. Management is probably more about maintaining good relationships and trust in the products.. Possibly a lot of politics involved as well, since they are dealing with the utmost private information on clients networks.

[weijian]

Good calculation!!

IMHO its already been 2 years and the amount was 2million plus.

Given that the 2 employee is not "under arrest" (passport not taken), they are probably not in any serious trouble. However directors lim kopi and arrested probably as suggested due to SOP to investigate fully.

I am betting that company has so far been quite transparent in announcing the 2million case in 2024 and even lawyers is cleared. if any issue likely will make accounting and lawyers look bad. (i have not seen the report for capita land voucher but if just to buy voucher then is probably for the vendor entire company staff)

The deciding issue here is whether or not there was any tender project/contract given to Multichem back in 2024. If the vendor is just a long time partner and this 2mil did not affect any tender which resulted in favourtism for multichem vs other bidder company then there should be no issue as this is accepted industry wide practice for gift giving.( though i am a little shocked as I did not expect one company can gift another company so much! yes i have to admit once I decide to hold a counter i usually just set and forget and collect dividend lol)

there was a director share buyback this year at $4+ level just recently.
So I do not think the boss had any idea this was about to happen either...

the stock fall has taken a pause now and I am now nibbling at $2 level. Seems like not much buying queue above 2.01-2.10 . will see what happens later today.

Hi BlueKelah,

The Audit and Risk Management Committee (ARMC) which is made up of only IDs and chaired by a non-executive independent chairman (coincidentally only appointed in April2024 after this issue first surfaced out in ~March2024 for FY23 audit) has only mentioned that they do not know whether the 2 employees are arrested or not.

Back in 2024, Multi-Chem was not in any legal trouble. A lawyer firm was appointed to do an independent audit, which was self directed and not meant to "clear" them of any legal issue. The independent audit was probably too late for FY23 and so they had a qualified opinion for that year's audited accounts, but they did get cleared for FY24 (which I presume includes FY23 account numbers). So the independent audit did aid towards them getting an unqualified opinion for FY24 accounts. In addition, I don't think the Company was been "transparent" per say because based on the announcements back then, it was the auditors/ARMC who first flagged out this issue.
https://links.sgx.com/FileOpen/Multichem...eID=793034

On my personal opinion on whether these professionals will look "bad or not", we just need to read their small print disclaimers to understand that they (probably) got their backs covered.

Our founder couple had been buying/selling at bits and pieces over the years. At its peak, they had total ~69.2% stake (2022) compared to now at ~68.2% (1% lower than peak). I used to track them a bit but couldn't understand them after a while (u can refer to my post here: https://www.valuebuddies.com/thread-2355...#pid171755)

[weijian]

From evidence so far, on Mtech's side, there isnt evidence that employees siphoned money or
acted against the interest of the company. However the methods they go about advancing their business interest
is questionable, but not uncommon.

I will refer to the statement made by the Company in March2024 (in italics below with emphasis mine)

The amount was ostensibly for the purposes of purchasing CapitaLand vouchers for marketing and promotional purposes on behalf of a vendor of the Group. The sum had been paid by the Company into the personal bank accounts of two employees of the Group, who then on-paid this money to one employee of the vendor.

The monies were paid on behalf of their vendor for the vendor's own marketing and promotional purposes. So I would presume that the final recipient of these capitaland vouchers would be the enterprises that bought these products. I would imagine the relationship as below:

Vendor (could be technology owner or regional main distributor) --> MTECH (the reseller or channel partner who does the onsite work) --> enterprises who utilizes it.

Since these methods to advance business interest are "not uncommon" but CPIB has decided to further their investigation of such "common methods", what does it imply?

March2024 statement: https://links.sgx.com/FileOpen/Multichem...eID=793034

[BlueKelah]

[quote pid="174425" dateline="1790049701"]


Our founder couple had been buying/selling at bits and pieces over the years. At its peak, they had total ~69.2% stake (2022) compared to now at ~68.2% (1% lower than peak). I used to track them a bit but couldn't understand them after a while (u can refer to my post here: https://www.valuebuddies.com/thread-2355...#pid171755)
[/quote]

as they say can sell for any reason under the sun, but if they buy open market usually means they feel that its gonna end up worth more   since they could easily just do buyback and reward the share options to themselves.

it seems like for now selling pressure is gone and shorts (if any) are covering with positive larger market sentiment. not gonna get my $2 chicken rice price now. hahaha.

nevermind I am buying for yield, even if up to $2.50-$3 range also a good buy wait and see what happens for now.

@bigtoe, did you manage to dip your toes in or also queue and cant get any?

[Big Toe]

I dont disclose my holdings but sometimes (Very clearly) hint at it.
For Multi Chem, decision is made easier/faster as I followed it.
So it is always good to be prepared. Mentally and with bullets in hand.

Yesterday was a better day to dip in as there were large amounts of low hanging fruits to be picked.
Today, or at least for now, there isnt any significant chunks of shares for sale around this $2.27 price level.
My strategy is always to spread out buying and be prepared for further downside.

[BlueKelah]

I dont disclose my holdings but sometimes (Very clearly) hint at it.
For Multi Chem, decision is made easier/faster as I followed it.
So it is always good to be prepared. Mentally and with bullets in hand.

Yesterday was a better day to dip in as there were large amounts of low hanging fruits to be picked.
Today, or at least for now, there isnt any significant chunks of shares for sale around this $2.27 price level.
My strategy is always to spread out buying and be prepared for further downside.

haha not asking your holdings , just if you managed to grab any  sounds like you did
yeah not much available in queue, even the bid ask spread is quite wide, possibly its all computer market making trading.

I already have this counter at low/free  cost and previously taken some profit around $3+ level , so just looking to load some at low level if possible. As Rick Rule like to say, get it when its unloved...

Now still a bit volatile, i usually like to buy when things quiet down and no action.. like now slowly get infinity dev

I think either case closed this week and back to $4 or kena charged and back to $2 hahaha

[Big Toe]

WeiJian
Also to clarify, the methods are not uncommon does not mean it is right and is common practice.
A more straightforward example would be bundling extra stuff as a package that user/decision maker might want.
And usually it is of low value compared to the total contract value. The client's company usually dont bother with the freebies and the IT guys(user/decision maker) can have it.

What is more interesting in this case is that
1. Amount is Large. (ie if S. Iswaran accepted a Labubu doll only once, the PM probably would have let it go)
2. Personal Banking Accounts is used
3. No related goods/services was rendered for this payment to make this a valid contract. (com'on vouchers? Really?)
4. Might have whistle blower.

Multichem might want to secure more territories or be the sole distributor within region assigned by this vendor to have gone to such length.

[opmi]

Hi BlueKelah,

The Audit and Risk Management Committee (ARMC) which is made up of only IDs and chaired by a non-executive independent chairman (coincidentally only appointed in April2024 after this issue first surfaced out in ~March2024 for FY23 audit) has only mentioned that they do not know whether the 2 employees are arrested or not.

Back in 2024, Multi-Chem was not in any legal trouble. A lawyer firm was appointed to do an independent audit, which was self directed and not meant to "clear" them of any legal issue. The independent audit was probably too late for FY23 and so they had a qualified opinion for that year's audited accounts, but they did get cleared for FY24 (which I presume includes FY23 account numbers). So the independent audit did aid towards them getting an unqualified opinion for FY24 accounts. In addition, I don't think the Company was been "transparent" per say because based on the announcements back then, it was the auditors/ARMC who first flagged out this issue.
https://links.sgx.com/FileOpen/Multichem...eID=793034

On my personal opinion on whether these professionals will look "bad or not", we just need to read their small print disclaimers to understand that they (probably) got their backs covered.

Our founder couple had been buying/selling at bits and pieces over the years. At its peak, they had total ~69.2% stake (2022) compared to now at ~68.2% (1% lower than peak). I used to track them a bit but couldn't understand them after a while (u can refer to my post here: https://www.valuebuddies.com/thread-2355...#pid171755)

from the AGM, there is new ID and old ID...the old ID like dont know cybersecurity one leh...more like from PCB days...haha... I am not impressed by the IDs... the old Chairman/founder is SME boss type.

[weijian]

Multi-Chem has responded to a SGX query but not a lot of additional information is available due to CPIB's gag order as investigations are on-going. However a timeline is CPIB action is available and also more on the 2 employees.

It seems like the 2 employees may end up as prosecution witnesses if there is a case....would be pretty awkward to provide a statement against your bosses in court I suppose (in this case, real "bosses" and not "supervisor")

RESPONSE TO SGX QUERIES IN RELATION TO ATTENDANCE BY CERTAIN EXECUTIVE DIRECTORS AND EMPLOYEES WITH THE CORRUPT PRACTICES INVESTIGATION BUREAU FOR INTERVIEWS

Response - The two senior employees are Pui Boon Tiong, who is the Regional Director of the Group, and Ker Jian Yan, who is the Regional Product Manager of the Group.

Response – Mr Foo Suan Sai and Madam Han Juat Hoon have notified the Board of Directors that they are unable to disclose the nature and scope of the CPIB’s investigation as the CPIB has imposed a prohibition against discussing the investigations with any other person. Mr Ker Jian Yan has disclosed to the Board of Directors that the interview covered claims reimbursement relating to vendor personnel.

Response – Mr Foo Suan Sai and Madam Han Juat Hoon have both surrendered their passports and have posted bail. Mr Ker Jian Yan has informed the Board of Directors that his passport was not surrendered to the CPIB and no travel or other restrictions were imposed on him. Mr Pui Boon Tiong has notified the Board of Directors that he has been instructed by the CPIB not to disclose any matters arising from the investigation.

Response – The CPIB informed Mr Foo Suan Sai and Madam Han Juat Hoon on 14 September 2026 to attend an interview. Madam Han Juat Hoon attended on 14 September 2026. Mr Foo attended on 15 September 2026. The CPIB informed the two senior employees on 14 September 2026 to attend an interview. The Board of Directors understands that the two senior employees attended CPIB on 14 September 2026.

https://links.sgx.com/FileOpen/Multichem...eID=904754

[Big Toe]

A little bit more info on the response.

"Mr Ker Jian Yan has disclosed to the Board of Directors that the interview covered claims reimbursement relating to vendor personnel"

So this statement may imply that the vendor had claimed "some expenses" from multichem.
The details of which is unknown.
Again it is not an invoice and likely not an official contract.
This may or may not be related the earlier voucher thingy.
Likely related.

And my best guess is that Mr Foo Suan Sai might have given the green light for this transaction to happen (or at least informed and aware of this)
and that the amount is significant. Exciting times