SINGAPORE (June 11): Eneco Energy, previously known as Ramba Energy, has decided to appoint an independent external reviewer to obtain satisfactory audit evidence or explanations regarding a certain payment of $3.9 million by a subsidiary of the company to a broker, which is an Indonesian party.
Eneco Energy was informed of the payment by its independent auditors, Ernst & Young, in the course of its audit investigations.
The subsidiary involved, Ramba Energy West Jambi (REWJ), was also the contractor of the group’s West Jambi concession. It was required to furnish a bank guarantee to the concession holder in order to secure the extension of the exploratory permit for the concession.
During the financial year, a director, who also is a substantial shareholder of the company, withdrew about $3.9 million worth of funds from another company’s bank account.
The director and management then represented that the funds were advanced to a broker to secure a bank guarantee from its bank in favour of REWJ, according to Eneco Energy.
However, the auditors say while the documents presented by the director and management were for the purpose of the queried payment, they showed inconsistencies with information obtained by the auditors from the broker’s bank that issued the proforma bank guarantee and the concession holder.
"The queried payment was recorded as an amount due from a broker and subsequently a full impairment allowance of about $3.9 million was made against the amount due, after queries were raised about its recoverability," says Eneco Energy.
Due to the inconsistencies, the auditors were not able to ascertain the commercial rationale of this arrangement, as well as the nature, existence and recoverability of the queried payment.
As such, the auditors could not determine if the queried payment is appropriately accounted for, presented, disclosed and whether the allowance recorded against the amount is appropriate.
Shares in Eneco Energy last traded 5.56% lower on Monday at 6.8 cents.
