Honestbee has sought legal advice and taken action against former CEO Joel Sng and former director Jeffrey Wong, through letters of demands for breach of fiduciary duties. According to honestbee, since their departures, the company has been investigating various transactions entered into by the company while Sng and Wong were CEO and director of honestbee respectively. The transactions investigated involved the purchase of a house in Niseko, the incorporation of a company named PayNow to develop an e-wallet solution, and tenancy at 34 Boon Leat Terrace.
According to honestbee, Sng was discovered to have purchased a house in Niseko, Japan under his name in December 2015. On his instructions, honestbee paid the purchase price of about US$1.1 million including the acquisition tax, on top of other running costs of the property.
"During the time of the purchase, there was no apparent real benefit or commercial advantage for honestbee to purchase the Niseko house and make payment on behalf of Sng for it," the company said.
The company then said that three years later in February 2018, Sng "attempted belatedly to regularise" the Niseko purchase by entering into an agreement with honestbee. In the agreement, 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. According to honestbee, the Niseko purchase was not disclosed to the then-board or company's shareholders until September 2018.
Meanwhile in January 2017, Sng incorporated a company called PayNow to develop an e-wallet solution on his own account. According to honestbee, 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 SG$4 million as a company, honestbee then entered into a "share subscription" agreement and a "partnership" agreement with PayNow.
As part of the agreement, honestbee subscribed for 20% of the ordinary shares in PayNow, with Sng owning the remaining 80% of the ordinary shares in PayNow. Honestbee paid SG$1 million for the share subscription.
Between August 2017 and February 2018, honestbee said it paid further sums totalling about SG$6.4 million for the purported purchase of Sng's shares in PayNow. According to the company, these payments were made at Sng's instructions. Before September 2018, honestbee said 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," the company said. According to honestbee, it had essentially paid about SG$7.4 million in total to subscribe and acquire Sng's 100% shareholding of PayNow. "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 company added.
Honestbee also investigated the tenancy at 34 Boon Leat Terrace and Open Space. The space at 34 Boon Leat Terrace used to house habitat by honestbee, while Open Space is the unit above habitat. According to honestbee, the tenanted premises were of no real use to honestbee. In May 2013, Sng and Wong founded a company called The Cub SG 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, the landlord of habitat by honestbee for 34 Boon Leat Terrace, and Open Space.
According to honestbee, it paid for all security deposits and transaction costs, including stamp duty, for the tenancy agreement. It also forked out the monthly rent and expenses totalling about SG$51,000 per month from October 2017 to 2018, as well as the architectural design fees for the premises, on behalf of The Cub.
Before September 2018, Sng did not reveal The Cub's payment arrangement to the then-board or shareholders of honestbee. Since October 2017, honestbee said the tenanted premises were left empty and "in fact were of no real use to honestbee", it said.
"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," honestbee said.
The company added that the breaches outlined above are non-exhaustive and based on the company’s ongoing internal investigations to-date. According to honestbee, it has not received any 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.
Sng left the company in May last year and was replaced by Brian Koo, who resigned a few months later in September. According to The Straits Times then, the company still owed staff salaries amounting to approximately SG$1 million. Singapore's Ministry of Manpower recently confirmed that honestbee owes employees their salaries for February 2020 and CPF contributions for the months January and February 2020. As for its former employees, an MOM spokesperson told Marketing previously that the company has committed to a repayment schedule over five instalments from 30 September 2019.
Earlier this month, the company laid off approximately 80% of its employees in Singapore. The total headcount prior to the job cuts was 130. It also suspended its operations at habitat and ventured into a pizza joint business instead, located at Upper East Coast Road.
Separately, its food and grocery delivery service in Malaysia has been "temporarily suspended" since 22 July. An email from honestbee to its consumers said the decision was made from its headquarters in Singapore to reform the business so it can better serve consumers in the future when honestbee returns.
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