The Securities and Exchange Commission (SEC) has filed a criminal complaint against an executive of Group Lease (GL), alleging fraud, misappropriation of company assets and falsification of accounting through concealed transactions involving associated overseas companies.
In a press release, the SEC said concealed transactions were made through several associated companies abroad to exaggerate GL's operating results.
SET-listed GL is a digital finance company specialising in hire purchase for Japanese motorcycle brands.
"With reference to the annual financial statements for the year 2016, wherein the auditor made a note on the loan transactions with foreign debtors, which subsequently increased GL operating results, the SEC investigated further and found that [GL chief executive Mitsuji] Konoshita had ordered Group Lease Holding Co Ltd (GLH), a subsidiary of GL based in Singapore, to issue loans to several foreign companies," the SEC said.
The regulator pointed to evidence that GLH had issued loans to four registered companies in Cyprus and another in Singapore worth US$54 million (1.78 billion baht), with Mr Konoshita serving as the controller and ultimate benefactor.
After receiving the loans from GLH, the five debtor companies transferred the money within companies of the lender's group to repay the interest and principal to GLH in an instalment, the SEC said.
The interest payments were recorded as income in GLH's financial statements, which constitutes fabrication of GL's accounting records and exaggeration of its operating results, according to the SEC.
"Mr Konoshita's misconduct [entailed] an execution of concealed transactions, asset misappropriation, allowance of false accounting transactions and preparations of incorrect accounting records," the SEC said. "In addition, he informed and disseminated false statements, which affected GL's securities price and the decisions made by investors."
Since Mr Konoshita is alleged to have violated the SEC Act 1992 and the SEC Act 2016, the SEC has filed a criminal complaint with the Department of Special Investigation for further proceedings.
The SEC has also informed the Anti-Money Laundering Office of the case, as Mr Konoshita's alleged offences could possibly be considered asset misappropriation under the penal code of the Prevention and Suppression of Money Laundering Act.
The SEC has received assistance from Cypriot authorities in investigating and gathering important facts and evidence for prosecuting the case. Other persons related to the allegations are also being investigated.
The Stock Exchange of Thailand posted a trading halt sign in yesterday's morning session and later posted a suspend trading sign for the afternoon session because GL did not inform the public about the SEC's criminal filing, said SET senior executive vice-president Santi Kiranand.
According to the SET, as of Oct 12, the number of retail investors investing in GL shares was 17,557 people, representing 43.7% of the equity shareholding. GL's market capitalisation stood at 33.7 billion baht, while the share price has dropped 61.4% year-to-date.
"Small and medium-sized stocks were invested in during a time of positive market sentiment, but return and risk should be considered if those stocks are worthy to invest in," said Tisco Securities chief executive Paiboon Nalinthrangkurn.
But Tatsuya Konoshita, chairman of GL's executive committee, said the SEC's criminal filing may stem from a misunderstanding and the company remains confident in its financial statements and balance sheet.
