In April 2003, the Finance Manager of Orix Leasing Singapore Limited noticed that the scrap value of the company car had not been accounted for nearly a year after it had been sent to the scrap yard. She found out from the company driver that the car was scrapped on the instructions of Orix managing director Kwek Chye Teck in May 2002. Sensing that something was amiss, she reported the irregularity to the assistant general manager of Orix.
In May 2003, the matter was escalated to Kwek's superior, the managing director of Orix Investment & Management Pte Ltd. An internal investigation was then launched.
Upon questioning, Kwek confessed to scrapping the company car and retaining the scrap value. He also admitted to misappropriating the scrap value of several cars that Orix had repossessed over several months in 2002. He was sacked, and on 21 May 2003, a report against Kwek was filed with the CAD. On the same day, Kwek fled Singapore.
Kwek later surrendered to CAD on 26 May 2003. CAD's investigation revealed that Kwek had misappropriated a total of S$2.3 million by retaining the proceeds from selling of PARF papers and forging loan applications and disbursements. Most of the money was used to pay off bookies and loansharks.
On 1 July 2003, Kwek was charged with six charges of forgery and 10 charges of criminal breach of trust. He pleaded guilty in September 2003 and was sentenced to 8 years' imprisonment.
- Better checks and balances. Kwek had a lot of authority in the company and he abused his power to override the checks and balances in place. It is thus important to have good corporate governance, eg. an independent internal audit unit that reports directly to the audit committee.
- Segregation of duties. It is important to separate custodian and disposal duties. In this case, Kwek could approve loans, give instructions on their disbursement, and collect money from debtors. This creates opportunities for misappropriation of company funds.
- Better controls on assets that can be converted to cash. Scrapped car rebates or PARF papers are transferable, can be easily traded and sold for cash. Companies should impose controls to ensure safe custody and accountability of PARF papers and other assets that can be easily converted to cash.
- Importance of whistle blowers. Kwek's case would not have been uncovered if the finance manager had kept quiet after she discovered the accounting irregularity. Companies should encourage whistle blowing.