SINGAPORE (Apr 16): Catalist-listed tourism company Memories Group announced Wednesday it has uncovered the misappropriation of some US$500,000 ($707,000) from the accounts of wholly-owned Myanmar subsidiary, Asia Holidays Travels & Tours (AHTT).
The Myanmar-based group alleges that the case of fraud was carried out by three employees involved in the AHTT business.
The misappropriation was discovered when AHTT’s finance manager conducted checks in February 2020.
Memories says the three employees involved in the fraud were immediately dismissed.
The group had also lodged a police report in Myanmar. “The suspects are currently held in custody and likely to be charged in court,” Memories says in a regulatory filing.
Since then, the group has commissioned a forensic audit, and has deployed its Risk Management and Internal Audit team to carry out further investigations on the accounts of the subsidiary concerned.
In particular, the investigations centred on AHTT’s peak operating periods of May 2019 and September 2019 to January 2020.
The team found that “whilst overall internal control procedures were in place, they could be further strengthened,” Memories says.
It adds that measures are being taken to “continuously strengthen these controls especially in the area of accounts payable”.
Memories says it is actively pursuing legal recourse to recover the misappropriated monies, which will entail a civil lawsuit to be filed.
Investigations are on-going to determine the full duration of the fraud and the total amounts misappropriated.
As at end September 2019, Memories’ cash and cash equivalents stood at just US$1.5 million.
The groups says any impact of the misappropriation will be reflected in the financial statements of the group for the period ending September 2020.
The group in February announced it is moving its financial year end from March 31 to Sept 30, in compliance with a mandate from the Ministry of Planning and Finance of Myanmar.
In its last results announcement back in November 2019, Memories reported a near doubling of its losses for 2QFY2020 ended September 2019 to US$3.1 million. For the same period the previous year, the group had reported losses of US$1.7 million.
The deeper plunge into the red came despite a 44.7% increase in revenue to US$369,000. This was led by an increase in its hotels segment, which saw revenue jump more than four-fold to US$300,000.
However, administrative expenses climbed 27.9% to US$2.4 million on the back of increased overhead and depreciation expenses relating to full operations of two newly-opened hotels.
A substantial rise in electricity rates across the country also contributed to the increase in expenses.
Shares in Memories Group closed flat at 3.8 cents on Wednesday. Year-to-date, the counter has plummeted 60%.
