News

Everything About the Raffles Education Saga Whereby Family Members Are Allegedly Engaged With High Salaries

Shawn Ambrose

2021-10-19 , 1:05 pm

Fluctuation in share prices occurs all the time, and is usually nothing to be concerned about.

But when it plunges 26%, you know something has gone seriously wrong.

That’s exactly what happened to Raffles Education Corporation (REC) recently, and it was all due to a letter.

Before we get to that, however, let’s get to know the two protagonists in this tale.

A Bitter Feud

Oei Hong Leong and Chew Hua Seng have not exactly been the best of friends.

Mr Oei, known for being filthy rich, is a businessman who owns 10% of REC. His BFF Mr Chew, is REC’s chief executive and founder.

Mr Oei took the latter to court in 2019 alleging that he had promised to buy back his shares in Raffles Education at 44 cents over two years ago.

He lost the legal battle to enforce the deal, but the feud seems to have continued.

Sent Letter to Board Questioning Why Company Hired Family Members With High Salaries

The pair grabbed the headlines once again after a letter penned by Mr Oei and addressed to the company’s board was revealed and circulated.

In the letter, dated 16 Oct, Mr Oei asked Mr Chew why he had caused the company to hire all “adult members of his family at high salaries”.

Specifically, the tycoon asked Mr Chew about the money that the company had doled out to:

Ms Doris Chung Gim Lian – Mr Chew’s second wife,
Mr Chew’s two sons from his two marriages
Mr Chew’s first wife’s daughter-in-law

“These are just official family members,” the letter said. Mr Oei added that these sums are in addition to the amount Mr Chew had paid himself for his salary, bonuses, and profit-sharing.

REC’s Response

Following the 26% plunge in shares, Raffles Education called for a halt in trading this morning (19 Oct), pending an announcement.

It said it viewed Mr Oei’s letter as containing “bare allegations and material inaccuracies which are not substantiated.”

It added that the company is taking legal advice and will respond to the letter in due course.

Stock Under Pressure

Before the letter was circulated, an independent auditor, BDO LLP, found that the company had $196.4 million of current liabilities and current assets of $96.8 million.

It was also reportedly issued a writ issued by Affin Bank amounting to around RM$410 million (S$132.9 million) on an unpaid loan.

REC’s stock is already down 37% this month, with its market capitalisation losing $50 million in value.