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Megan Media Holdings Bhd is an optical disk manufacturing company that defaulted on RM893.97 million in banking facilities. An investigation found that the company was involved in fictitious trading and transactions totaling over RM500 million. The directors of Megan Media at the time were Dato’ Dr.Hj Mohd Adam Bin Che Harun, Maj. Gen. (Rtd) Datuk Nordin Bin Yusof, Redzuan Bin Abdul Rahman, and Mohd Nur Ismal bin Mohd Kamal. The audit committee lacked independent directors with relevant expertise. The document concludes that fraud occurred at Megan Media based on symptoms seen in the financial reports and transactions. Independent directors on the
Megan Media Holdings Bhd is an optical disk manufacturing company that defaulted on RM893.97 million in banking facilities. An investigation found that the company was involved in fictitious trading and transactions totaling over RM500 million. The directors of Megan Media at the time were Dato’ Dr.Hj Mohd Adam Bin Che Harun, Maj. Gen. (Rtd) Datuk Nordin Bin Yusof, Redzuan Bin Abdul Rahman, and Mohd Nur Ismal bin Mohd Kamal. The audit committee lacked independent directors with relevant expertise. The document concludes that fraud occurred at Megan Media based on symptoms seen in the financial reports and transactions. Independent directors on the
Megan Media Holdings Bhd is an optical disk manufacturing company that defaulted on RM893.97 million in banking facilities. An investigation found that the company was involved in fictitious trading and transactions totaling over RM500 million. The directors of Megan Media at the time were Dato’ Dr.Hj Mohd Adam Bin Che Harun, Maj. Gen. (Rtd) Datuk Nordin Bin Yusof, Redzuan Bin Abdul Rahman, and Mohd Nur Ismal bin Mohd Kamal. The audit committee lacked independent directors with relevant expertise. The document concludes that fraud occurred at Megan Media based on symptoms seen in the financial reports and transactions. Independent directors on the
1. Discuss the issue in the company that you chose.
A brief background of the company, who are
their directors (please list this down, how many Audit committees-outside/ independent/ expertise?, directors ( non-executive and independent) and external auditors. Which political connection they belong to?
Issues in the Megan Media Holdings Bhd Megan Media defaults on RM894m bank facilities : Megan Media Holdings Bhd, which is being investigated by the Securities Commission, and its subsidiaries have defaulted on RM893.97mil in maturing banking facilities (principal only). The optical disk maker, which has been found to be involved in fictitious trading, said it had defaulted on all facilities granted by its bankers. The company was unable to repay the debts due to the constraints to its current cash flow from its manufacturing operations, it told Bursa Malaysia late last night. Megan Medias problems are not confined to the mounting debts, but also the fictitious transactions that might have involved more than RM500mil cash. The creditor banks hired Ferrier Hodgson MH Sdn Bhd to conduct investigations on Megan Medias unit Memory Tech Sdn Bhd (MTSB). The interim findings of Ferrier Hodgson show that MTSBs suspect transactions included a RM211mil deposit paid for 13 production lines that could be fictitious, in addition to the fictitious trading that resulted in receivables totalling RM334.3mil. It also revealed that MTSBs assets could potentially fall short by RM456mil. Ferrier Hodgson said the value of MTSBs fixed assets of RM585mil needed to be investigated further while the net realisable value was unknown. The investigation discovered that the payments to all trading creditors were actually made to other parties in a move to channel cash out of MTSB. Megan Medias balance sheet as at Jan 31 shows that borrowings stood at RM888mil. Its receivables grew to RM430.3mil from RM319mil a year earlier. The cash flow statement showed a negative net cash of RM57.9mil generated from operating activities. Megan Media said it would engage the creditor banks to formulate the debt restructuring scheme and regularization plan in ensuing weeks. It will also initiate legal action to recover all amount lost due to the irregularities. The statement said Megan Medias state of solvency would ultimately depend on the outcome of the debt restructuring and regularization endeavour. However, the company pointed out that the report on interim findings of Ferrier Hodgson indicated that it had sufficient short-term cash flow based on its current modus operandi. It may incur a net loss of RM552mil for the fiscal third quarter ended Jan 31 after adjustments for fictitious transactions, instead of a profit of RM10.5mil as per the published unaudited accounts.
Brief background of Megan Media Holdings Bhd Megan Media Holdings Bhd established in early 1994, an investment holding company provides management consultancy services. The principles activities of the company started from producing plastic injection components to a range of electronics and automotive parts. Recognizing the future prospects of the data storage media industry in 1996, MMHB ventured into the manufacturing of3.5" multi-function disk (MFD) and videotapes through its subsidiary company MTSB. In the 1999, MTSB expanded into the manufacturing of compact disc- recordable (CD-R) and digital versatile disc-recordable (DVD-R). It became the first Malaysian company to receive pioneer status from the Ministry of International Trade and Industries for manufacturing magnetic and optical data storage products. On August 8, 2000, MMHB was listed onto the Second Board of the Kuala Lumpur Stock Exchange. MMHB's entire share capital transferred from the Second Board to Main Board of the Exchange under the "Industrial Products" sector with effect Tuesday, December 3, 2002. MMHB aggressive market strategy has resulted in the company achieving a prominent footing as the largest manufacturer of CD-R and DVD-R in the country.
Who are their directors (please list this down , how many Audit committees-outside/ independent/ expertise?, directors ( non-executive and independent) and external auditors.
Directors of the Company
Directors who served since the date of the last report are:
Dato Dr.Hj Mohd Adam Bin Che Harun Maj. Gen. (Rtd) Datuk Nordin Bin Yusof Redzuan Bin Abdul Rahman Mohd Nur Ismal bin Mohd Kamal (appointed on 28 September 2007) Datuk Rosli Bin Mat Hassan (resigned on 30 June 2007) Yeo Wee Siong (resigned on 7 June 2007) Alice Kuek Ai-Lee (resigned on 3 May 2007)
Which political connection they belong to?
Conclusion Fraud is a major concern for organizations world-wide. It is not a matter whether your organization is large or small or what country or industry your organization is in, as long as humans are involved in organizations, the risk of fraud is real. We conclude that the company (Megan Media Holdings Bhd) committing fraud. Symptom company commit fraud probably can be seen before, during or after the year fraud happen. The composition of independent director should play an important role in reducing the likelihood of financial statement fraud. The audit committee members should be consists pure from independent director.