Stark Finds $426 Million of Irregular Transactions in Thai Audit

2023-09-30 11:54

Stark Corp., a Thai industrial cable maker at the center of an accounting scandal and debt defaults, discovered

Stark Corp., a Thai industrial cable maker at the center of an accounting scandal and debt defaults, discovered at least 15.6 billion baht ($426 million) of irregular transactions at its units after completing parts of a required special investigation.

Phelps Dodge International (Thailand) Ltd., Stark’s cable-making unit, had total damages of 12 billion baht in 2021 and 2022 from more than 200 irregular transactions, Stark said in an exchange filing late Friday. More than 3.6 billion baht in such irregularities were found at two other Stark units, it said.

Stark faces a deepening criminal investigation and class-action lawsuit after its revelations of irregularities in past accounting. The company’s default on some of its 39 billion baht in liabilities, and fraud charges against executives have sparked a crisis of confidence in market regulators and embroiled the nation’s bond markets.

Phelps Dodge’s irregularities that had been discovered came mainly from payments for false purchases of raw materials and undocumented loans, according to Stark. Unusual transactions at two other units involved the fraudulent payments for products, it said.

Stark hasn’t completed an audit on the use of 10.7 billion baht in proceeds from bond sales and 5.6 billion baht from the private share sales, it said. The company submitted a so-called “extended-scope special audit” report at the Friday deadline as required by the Securities and Exchange Commission. The submission had been extended several times.

Stark’s shares were suspended after sinking 99% this year. In June, it reported the restated financial results that showed combined losses of 12.6 billion baht in 2021 and 2022 and said liabilities exceeded assets.

The Securities and Exchange Commission in July ordered the seizure of the assets of the company, its largest shareholder Vonnarat Tangkaravakoon, and some former executives allegedly involved in falsifying accounts. Vonnarat, a scion of one of Thailand’s wealthiest families, pledged not guilty in August for his alleged involvement in the accounting scandal.

--With assistance from Suttinee Yuvejwattana.