SINGAPORE, Aug 24 — The founder of a publicly listed investment holding company, which holds the patent for the ubiquitous thumb drive or USB flash drive, was sentenced to a S$80,000 (RM243,500) fine today for failing to disclose transactions worth about US$10.4 million (RM43.44 million).

Henry Tan, also known as Henn Tan, pleaded guilty in a district court to two charges under the Securities and Futures Act. Another four similar charges were considered for sentencing.

The 63-year-old Singaporean was the chairman and chief executive of Trek 2000 International Limited at the time of his offences in 2010 and 2013.

Tan’s claim to fame was creating and patenting the thumbdrive in 2000, eventually rendering the floppy disk obsolete.

He founded Trek 2000 about 25 years ago, overseeing its growth from a small family-owned electronic parts trading business to a global company.

The court heard that the Singapore police’s Commercial Affairs Department (CAD) discovered his offences during investigations into separate offences committed by Trek 2000’s management.

The CAD began investigating the firm in 2016, after receiving information from the Accounting and Corporate Regulatory Authority.

The transactions in question

Under the Singapore Exchange’s Mainboard Rules, Trek 2000 was required to announce transactions with "interested persons” if the aggregate value amounted to 3 per cent or more of the group’s latest audited net tangible assets.

Such "interested persons” would have included S-Com Solutions (Hong Kong), which was wholly owned by Tan from 2008 to 2015, and T-Data Systems (Singapore), of which Tan’s son owned 80 per cent from late 2012 to early 2014.

In 2013, Trek 2000’s subsidiaries sold and bought products with a total value of US$882,256 to S-Com Solutions (Hong Kong), which was wholly owned by Tan, and US$9.58 million of products to T-Data Systems (Singapore).

But Tan failed to disclose an additional six transactions involving capacitors and integrated circuit chips with S-Com Solutions in 2010. 

He also failed to disclose 18 transactions — involving wafer and SD or USB components — with T-Data in the 2013 financial year. He also did not reveal during an audit committee meeting that his son held shares in T-Data.

In 2007, Tan had arranged for T-Data to be incorporated with his former director Poo Teng Pin’s wife, Loo Soo Hooi, as its sole shareholder and director.

In 2012, he then instructed that Loo transfer 80 per cent of T-Data’s shares to his son. The younger man held the shares from September 2012 to March 2014.

Poo was jailed for nine months and fined S$20,000 in June this year after pleading guilty to similar charges.

He also admitted to conspiring with other former top executives — Tan, then-chief financial officer Gurcharan Singh and former division president Foo Kok Wah — to inflate Trek 2000’s revenue and net profits for the 2015 financial year.

The court heard then that as a result, the company overstated the group’s net profits by 406 per cent in its unaudited financials, which prosecutors said would have "sent a completely misleading signal about its financial health and prospects” to the public and prospective investors.

Poo further admitted to cheating Ernst & Young, who were Trek 2000’s auditors, by falsifying a US$3.2 million sale.

Gurcharan and Foo’s cases are pending.

Tan still faces nine other charges of falsifying accounts, abetting forgery and conspiring to cheat Ernst & Young.

He will return to court for a criminal case disclosure conference over these charges on September 10. He remains out on bail of S$400,000.

For each charge of negligently failing to disclose interested person transactions, he could have been fined up to S$250,000, jailed up to seven years, or received both penalties. — TODAY