Amid mass layoffs and the shutdown of its supermarket, Honestbee announced that it has sought legal advice and sent letters of demand to ex-CEO Joel Sng and ex-director Jeffrey Wong over alleged breach of fiduciary duties.
The company has been investigating transactions that Sng entered into when he and Wong were still at Honestbee.
In a press release, the startup said it has “discovered numerous irregularities that call for further investigation.” The said probe and questionable transactions were first reported by Tech in Asia.
At the center of the investigation are three events:
House in Japan
In December 2015, Sng bought a house in Niseko, Japan under his name. On his instructions, the company paid USD 1.1 million for the property and covered its maintenance costs.
According to Honestbee, the company did not derive any “real benefit” or “commercial advantage” from the property purchase.
In February 2018, Sng “attempted belatedly to regularize” the purchase by creating an agreement, stating that the company had appointed him to act on its behalf three years prior.
The purchase was not disclosed to the board or to the shareholders until September 2018, Honestbee claims.
Unused commercial space
In May 2013, Sng and Wong started a company called The Cub SG Pte Ltd. Sng owned 70% of that company, while Wong owned the rest.
In October 2017, The Cub rented a space in the same venue as Habitat, the supermarket Honestbee used to operate.
On behalf of The Cub, Honestbee paid for the costs of renting the property, including the deposit, monthly rental, and renovation. The monthly rent and expenses amounted to about USD 422,000.
Sng did not disclose the arrangement until September 2018.
Sng incorporated PayNow Pte Ltd in January 2017 with the purported goal of developing an e-wallet.
He claimed that PayNow had a viable product that was ready for launch, noting that the company was worth around USD 2.7 million.
Over a period of time, Honestbee paid about USD 5.4 million to own PayNow. Some of the payments were found to be made on Sng’s instructions.
“It is believed that the above transactions have caused loss and damage to [Honestbee],” the company said.
That’s not all
Sng has been known to spend Honestbee’s funds extravagantly when he was CEO, sources familiar with the company told Tech in Asia.
The ex-CEO was known to stay in lavish hotels, fly business class, and make expensive entertainment claims, which can run up to thousands of US dollars per sitting. Meanwhile, other members of the senior management team flew on budget and stayed in cheap accommodations.
Sng had rented apartments in various cities and asked the finance team to expense luxury items.
“The breaches outlined above are non-exhaustive and based on the company’s ongoing internal investigations to date,” Honestbee said. “The company has not received any substantive response from either Sng or Wong.”
This article first appeared in Tech in Asia.