Honestbee announced today (March 24) that it has taken legal action against ex-CEO Joel Sng and ex-director Jeffrey Wong, through letters of demand, for breach of fiduciary duties.
Since their departures, honestbee launched an investigation on various transactions entered into by the company while Sng and Wong was still the respective CEO and Director of honestbee.
honestbee has since discovered numerous irregularities that call for further investigation:
1. Property In Niseko, Japan
It was discovered that Sng had purchased a house in Niseko, Japan under his name in December 2015, and the company — on his instructions — had paid the purchase price of about US$1.1 million (including acquisition tax), on top of other running costs of the property.
During the time of the purchase, there was no apparent benefit or commercial advantage for honestbee to purchase the Niseko house and make payment on behalf of Sng for it.
In February 2018, Sng belatedly attempted to regularise the Niseko purchase by entering into an agreement with honestbee — where Sng indicated that in December 2015 he had been appointed to provide Commissionaire activities by acting on behalf of honestbee in the purchase of the Niseko house — and the company had appointed Sng to purchase and hold the Niseko house.
The Niseko purchase was not disclosed to the then-Board or shareholders of honestbee until September 2018.
2. Tenancy At 34 Boon Leat Terrace #02-01 And Open Space
In May 2013, Sng and Wong started a company called The Cub SG Pte Ltd (The Cub), with Sng owning 70% shares and Wong owning the remaining 30%.
In October 2017, The Cub entered into a tenancy agreement with LHN Space Resources Pte. Ltd. (landlord of habitat by honestbee) for 34 Boon Leat Terrace #02-01 and Open Space — the unit above habitat by honestbee.
Honestbee paid for all security deposits and transaction costs (including stamp duty) for the tenancy agreement, and also paid the monthly rent and expenses totalling approximately S$51,000 per month from October 2017 to October 2018, as well as the architectural design fees for the premises, on behalf of The Cub.
Prior to September 2018, Sng did not disclose the Cub payment arrangement to the then-Board or shareholders of honestbee.
Since October 2017, the tenanted premises were left empty and of no real use to honestbee.
There was no real benefit or commercial advantage for the company to make payment of the tenancy transaction expenses and rent, as well as any other fees or payments for the premises, on behalf of The Cub.
3. E-Wallet Solution (PayNow Pte Ltd)
In January 2017, Sng incorporated a company called PayNow Pte. Ltd (PayNow) to ‘develop’ an e-wallet solution on his own account. He was the sole shareholder and director of PayNow.
Upon Sng’s representations that PayNow had a viable product that was ready for launch, and that PayNow was worth S$4 million as a company, honestbee then entered into a ‘share subscription’ agreement and a ‘partnership’ agreement with PayNow where honestbee subscribed for 20% of the ordinary shares in PayNow, with Sng owning the remaining 80% of the ordinary shares in PayNow.
Honestbee paid S$1 million for the ‘share subscription’.
Between August 2017 and February 2018, honestbee paid further sums totalling approximately S$6.4 million for the purported purchase of Sng’s shares in PayNow. These payments were made at Sng’s instructions.
Prior to September 2018, Sng did not disclose any of the transactions to PayNow to the then-Board or the shareholders of honestbee.
Honestbee has since found that PayNow did not during that time have a minimum viable product that was ready to launch. In fact, the said product that PayNow had produced was only at a rudimentary stage.
Honestbee had essentially paid approximately S$7.4 million in total to subscribe and acquire Sng’s 100% shareholding of PayNow.
Honestbee Awaits Response From Sng, Wong
It is believed that the above transactions have caused loss and damage to the Company, and have no doubt contributed to the financial difficulties of honestbee.
The breaches outlined above are non-exhaustive and based on the company’s ongoing internal investigations to date.
According to honestbee, the letters of demand was issued on March 9 and they are currently awaiting substantive response from either Sng or Wong.
Honestbee intends to, and will, raise and pursue any other questionable transactions that may come to light in the course of its investigations.
Featured Image Credit: Ivan Teh – Running Man