Royal Selangor On Fire Battling Money Investigation

The following is an update of the farce that saw the RSC’s new president thrown out of office in an unlawful EGM (Extraordinary General Meeting) engineered by a suspended member of the RSC (whose privileges were clearly suspended) earlier this year.

The suspended member engineered the ‘coup’ with the assistance of a retired judge, a groups of ‘lawyers’ and a number of individuals whose hands were caught in the till when the new president took over and ordered an audit into the clubs finances.

A brief is being prepared for the MACC and the Income Tax Office with the benefit of irrefutable documentary evidence of  financial impropriety and fraud involving the skimming of slot machine revenues, the over charging of sports club expense accounts, the pilferage of alcoholic beverages and club membership money by board and connected club members.

The range of offences include tax avoidance, tax evasion through under reporting of income and revenues from slot machines and what can only be described as theft of money and property of the club and its members have been unearthed following an internal audit and a privately funded investigation the evidence of which has just been brought to our attention.

The rorts have been going on for far too long; And the information in a brief is now being prepared for presentation to the MACC (Malaysian Anti Corruption Commission) and the Income Tax Commissioner.

Ironically the information and the identity of parties to these offences may come as a pleasant surprise to the MACC  as to involves individuals who hold themselves out as being of unimpeachable character and fighters against corruption .

Clearly what was earlier reported on this blog on the myriad of problems infecting the two premier social clubs in Malaysia,  The Royal Selangor Club (RSC) and the Royal Lake Gardens Club (RLGC) are more than mere allegations.

On 19 December it was reported that some members of the RSC walked out of their EGM (Extraordinary General Meeting) held in Kuala Lumpur in what has become common practice by a desperate group of disgruntled former board members and members supporting the old board.

The walk out is one in a series of staged walkouts held at various levels of the club organisational structure, with others that occurred previously following the election of a new board in July of 2016. These walk outs appear designed to stop and to frustrate the current board of the RSC from adopting and passing resolutions allowing it to further investigate the conduct of the previous board and the parlous state of its finances.

The practice of walking out, commonly known as Quorum Busting has become the hallmark of a dissident group within the RSC resisting independent scrutiny of its finances. 

AUDITOR CONFIRMS LOSS OF OVER $2,000,000 AND LOCK OUT OF AUDITORS

19 July 2017

House Internal Auditors in conjunction with two other independent accountants in  a leaked report (for forwarding to the MACC and to the Income Tax Commissioner) shows clearly;

a) Pilferage of goods, mainly alcoholic beverages. Some of it being channelled to outlets after being declared destroyed or diverted. Diversion of pilfered goods have been to the private interests of a club member (members) operating businesses independent of the RSC club (theft and pilferage). Sales incentives not reported believed to have gone to the benefit of certain club members.

b) Bad debts incurred out of breaches of the clubs lending and trade accounts policies- pointing to private undisclosed ‘deals’ with private suppliers appointed in breach of tendering procedures needing investigation totalling over $2,000,000.

c) Fictitious bloated assets of the club in creative accounting amounting to at least $1,275,789 ( at least twice the amount if audits of the sports club were to be properly  and independently conducted). Club president (acting) denied audotirs access to the clubs books of account.

d) Inaccurate misleading bank reconciliation ( an indication of fraudulent accounting and financial transactions- not explained)

e) Non compliance with tender procedures ( an indication of not at arms length contracting and award of contracts) in breach of club constitution and rules.

f) Slot machine credit card collections being posted to sundry income instead of slot machine credit card control account. (department of revenue, commissioner of income tax and MACC inquiry material) (Acting president locked out auditors from the Sports club owing to the sensitive nature of the misreporting and financial discrepancies in that section of the clubs finances) (an ongoing scam by certain club board members).

g) unsecured loans to members of the RSC in breach of the clubs constitution and rules, unverifiable ‘expenses and costs’ by the Sports section of the RSC over a period involving previous boards going back as far as 2003 amounting to several millions of dollars.

c) In a further insult to the members of the RSC, alcohol sold as premium brands were in fact bootlegged items diluted and stolen from unregistered suppliers unlicensed for the purpose including fake premium brands of whiskey purchased by the club through its members of former boards and passed off as the genuine item.

d) A Brief to the MACC and Income Tax department has been prepared and will be submitted to the two departments in due course by members of the club through their lawyers.

e) Former club board member “tipped off customs” to embarrass the lawfully elected subsequently deposed president of the club last year 2016. The purpose of the tip off was to prevent the audit of the clubs finances proceeding.

f) The clubs exposure to ‘doubtful debts’ as at 31/12/2016 it is said stands at almost $2,000,000. The ccredit risk is identified as being the result of members ‘enjoying credit limits of up to $5,000 without the requisite $5,000 to cover theirs and the clubs exposure in this regard. (The new boards knee jerk response to attempting to clean up the mess does not hide the audit trail and points to criminal conduct).

f) Input GST not accounted for properly (a matter for the Commissioner of Income Tax)

g) all in all a total loss of over $6,000,000 through misappropriation is suspected to have occurred over the term of the previous board whose tenure ended in June of 2016  (more to come as it unfolds)

Disruptions at the RSC are believed to be directed by a former president  of the club aided by a group of disgruntled members who appear to believe that they should  be consulted on anything and everything the new RSC board decides upon.  There appears to be resistance particularly to the prospect of an independent external audit into the club’s finances. This group of dissidents see it otherwise and claim a denial of natural justice principles as their reason for Quorum Busting.

What is evident is the proof of serious financial misconduct/ misappropriation and diversion of funds and other property at the RSC over the term of successive previous administrations. It is either that or simply the absence of financial and regulatory oversight at the club over the years; or further still a culture of gross negligence relating to the RSC’s finances over a period of at least 3 years.

This point is disputed by the dissidents only to the extent they will not allow a properly called meeting to conclude by their  practice of Quorum Busting.

The device of frustrating proper board and club business is an invitation to a court sequel hopefully ending with a court ordering an independent external audit into the RCS’s finances. The motion whether called and approved or defeated for an independent external audit of club (RSC) finances is inevitable in one form or another.

Problems at the RSC (and the Lake Club) run much deeper than mere management style differences or denials of natural justice. It involves a culture of deceit, deception and dishonesty so deeply embedded into the clubs management culture.

The recent walk out staged at the EGM raises serious questions about unlawful practices in the club that can be traced to a small coterie of members and office holders under previous management and the previous board of the RSC.

Dissidents within the RSC it appears, do not want  what an investigation has already begun to throw up to see the light of day.  And from what is available in information the dissidents have much reason to fear a comprehensive external independent audit of the club.

Quorum Busting and walkouts do not help the situation or anyone party solve their problems. It is an unlawful and unprincipled action that compels an external investigation into the club and its finances by independent external auditors. A police report perhaps which will be drawn up in due course.

The walkout has drawn an immense amount of curiosity, heat and interest into the RSC, its finances and its history. People – especially members – have begin to volunteer information identifying unlawful practices in the past by individuals relating to unauthorised, unlawful practices that they as members were never allowed to table under the former board. Same issues the dissidents now complains of-Not being heard.

On the information available, there has already been discovery of misappropriation, misdirection and diversion of club funds under previous administrations that total more than MYR 1,500,000, and possibly twice as much.

Money diverted and directed to the uses of individual members, for their benefit and in at least one instance to a complementary private business that absorbed club property in a seemingly seamless transfer appears to have been common under the RSC’s previous boards and managers.

It appears that the walkouts and the “black operations” of the few suspended and serving members is a desperate rear guard action by and on behalf of the few who benefited from receipt of RSC property and who now may be called to account for the missing funds at the club.

These dissidents appear to be disrupting and frustrating the functions of the present board and investigators by preventing membership and the board at meetings from advancing their investigations into misappropriation of club monies through the legitimate procedure and process of meetings.

Disgruntled factions of dissidents claim a denial of natural justice and denial of procedural fairness-but there is no evidence  to support either claim.  Each claim on closer examination appear to be a “red herring.

Allegations of a denial of procedural fairness and natural justice appear to be designed to distract the club, its members and the authorities from the real core problems in the RSC, corruption and theft. It include  the misappropriation of funds that carry criminal sanctions and outright unauthorised diversion of club property to individuals. If these allegations and the evidence unearthed prove accurate prosecutions are likely to follow.

For the present and on the available evidence there is nothing that would suggest the claims against previous boards are inaccurate.

It appears that the RSC with its serving judges, journalists, doctors, academics, politicians, lawyers and other professionals who have a lot to lose in their reputations or whats left of it now are likely to be the biggest losers in this fight. None though seem too disturbed by the possible consequences of dissident action. A former judge has gone to bat for them along with a lawyer cum politician in an effort to intimidate the current board they wish to topple.

This matter is not over by a long shot yet. There are amongst the fighting factions, retired and serving judges who appear to also be taking sides in what appears to be a parlous game for a power grab at the RSC.

Correspondence passing between at least one former judge, a lawyer, an ‘investigative journalist’ and two members of the interim board suggest the matter is pregnant with conspiracy.

An iPhone video of the meeting wherein a former judge took over the meeting appointing himself the chair or “agent of necessity” shows clearly that the whole disruption was planned. Affidavits purporting to support a misleading account of events were clearly designed to mislead the court and secure legitimacy of the current acting president. 

The EGM must proceed and an independent external audit must be conducted to explain  by what authority individuals had siphoned large sums of money to their own personal causes however disguised and padded in their invoices.

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Comments
2 Responses to “Royal Selangor On Fire Battling Money Investigation”
  1. Dato Frederick Georgre says:

    Please update as and when

    Like

    • grkumar says:

      We will. It does not bode well for the club or its reputation. There is more to come and the information points to criminality of the worst kind. More before the weekend.

      Like

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