Shareholder Victor Lim has put in a second EGM requisition notice

Fu Yu Corp, facing an EGM requisition bid from its largest shareholder, says it has uncovered unverifiable payments of more than US$2.98 million to an unnamed third party by a subsidiary that is undergoing a risk management processes investigation.

On Feb 6, citing an interim update from an external law firm Damodara Ong, Fu Yu says that this subsidiary Fu Yu Supply Chain Solutions, or FYSCS, paid for services which "did not appear to have been rendered".

According to Fu Yu, some current and former employees have been called to give interviews as part of the investigations.

They include Victor Lim, Fu Yu's director of strategy for the past four years, whose assistance has been requested for since last December.

Fu Yu "understands" that Damodara Ong is "in the process" of scheduling an interview with Lim through his lawyers.

Lim also happens to be the company's largest shareholder with a stake of more than 29%. His earlier EGM requisition has been turned down, according to Fu Yu on Jan 31. His request to join the board has been rejected as well, says Fu Yu.

Lim wants to oust two of the company's three independent directors and appoint three other IDs in turn as he is not happy with the company's deteriorating performance.

In Fu Yu's announcement on Feb 6, Lim, following the rejection last month, has on Feb 5 sent in a second EGM requisition repeating his requests.

Meanwhile, besides the unverifiable payments, Fu Yu says that as part of the probe on FYSCS, it has also uncovered potential conflicts of interest issues requiring deeper checks.

Other issues flagged included unauthorised use of an email account "bd@fuyu-scs.com" by third parties requiring further review; the secondment of an unnamed individual to FYSCS as its general manager from May 2023 to May 2024 whose conduct "raises questions".

In addition, there were also "irregular" expense claims made by an unnamed former employee of FYSCS on behalf of a current employee of Fu Yu, who is also unnamed.

The company says it will update shareholders and "meanwhile" it "will remain focused on, and be carrying on business as usual."

Fu Yu Corp shares closed at 12 cents, down 1.6% for the day.