DEVELOPING STORY: 11 February 2023, Perak Malaysia: YNH Property Bhd, KLSE: YNHPROP (3158) Directors Siphons more than RM1 Billion into the Yu Syndicate. Syndicate Directors YU KUAN CHON and his brother YU KUAN HUAT (pictured above) are Controlling Shareholders and Directors of YNH Property BHD (YNH) along with its sister company Rapid Synergy Bhd, KLSE: RAPID (7765).
The use of Imaginary Schemes resulting in Multiple Joint Ventures allows the YNH Directors to pump these funds into the YU Syndicate removing more than RM1 Billion from YNH Property Bhd. YNH can no longer sustain even the interest costs of its Debt from bank borrowings and Bonds and is now desperate to raise capital.
The YU Syndicate is controlled by YU KUAN CHON and his brother YU KUAN HUAT both are Controlling shareholders and Directors of YNH PROPERTY BHD, KLSE: YNHPROP (3158) and RAPID SYNERGY BHD, KLSE: RAPID (7765)). It is also important to note that recently the YU Syndicate has taken control of IMASPRO CORPORATION BHD, KLSE: IMASPRO (7222)
The historical Annual Reports of YNH show in its asset list a number of properties year after year. These lists tell a story going back as much as 20 years. The recent updates to Malaysian FRS regulations require YNH to clarify the status, disposition, and investments made in land and property. In the case of YNH, Property Assets are now listed in 3 main categories.
I draw your attention to the third category of Assets and Auditors note 8 item (v) of the 2021 YNH Annual Report: Included in properties held for development and properties under development of the Group are amounts of RM1,007,510,470 (2020: RM952,227,470) paid in respect of joint venture and turnkey contracts entered into with landowners for development work which has yet to commence. The land cost is subject to the agreed entitlement provided in the contract with the joint venture partners or landowners.
This means YNH has made regular deposits in cash of more than RM1 Billion into 18 dead or imaginary projects. This money is unregulated, unreported, untaxed, and not controlled by the YNH Property Bhd shareholders or creditors. Instead, it is controlled by the YU Syndicate which uses this money unchecked.
So why do the YNH Auditors (Messrs Baker Tilly Monteiro Heng PLT) show these non-performing assets valued at the amount deposited on the books? The majority of these companies who have received the “Deposits” have no operations and no employees. Many do not even file Annual Audited reports with Bursa Malaysia.
The authorities need to follow this money to see how it gets back the YU KUAN CHON and his Brother YU KUAN HUAT, leaders of the now infamous YU Syndicate. There are significant tax ramifications for taking money from companies and not declaring it as income. In real life it is called Dividends, so where did the money go?
Official reporter inquiries to YNH Property Bhd have been ignored for several months.
But, there is even more. The majority of the 18 dead land deals are all Joint Ventured with companies set up by YNH itself. These companies are mostly located in Perak Malaysia at the same address inside the YNH Construction Sdn Bhd complex. (Location pictured above) The location that has taken in nearly RM 1 Billion in deposits is an empty shop lot located:
91 JALAN PPMP 8 PUSAT PERNIAGAAN MANJUNG POINT 1 32040 SERI MANJUNG PERAK
This location was recently the subject of another troubling story focused on the Yu Syndicate:
These companies use the same known YU Syndicate Directors, YNH’s own in-house Company Secretary (CHENG GHEE CHENG), and are audited by LEE, YIP & ASSOCIATES PLT, a company owned by LEE CHUN WENG, a long-time Director of RAPID SYNERGY BHD.
Although YNH specifically declares these companies are NOT Related parties, the facts don’t support this claim. It is clear that this is only because they have not been officially caught. Connected Parties are related parties as well. The definition of Connected Parties is very broad and includes those directors that manage these empty companies on behalf of the YU Syndicate.
Just because you avoid the key elements of a related party transaction, does not mean it is not a related party transaction. It still is a related party as clearly defined in Malaysian law.
In earlier news, YNH Property Bhd announced they will raise RM500 million by leveraging 2 Malls in its inventory. That is clearly not in the best interest of Minority Shareholders.
YU KUAN HUAT and his brother YU KUAN CHON should immediately return the funds in yet another tax-free and clever way to save the company instead of taking the only performing assets of the company away from Creditors and Shareholders.
Minority Shareholders should demand an independent Audit of these deposits and a swift return to the company coffers. Why sell good-performing Assets when you have RM 1 Billion in deposits paid with no returns? RM 1 Billion will eliminate more than the debts owed by YNH leaving ample capital to actually Develop something like the company used to do before its Directors became so greedy.
The YU Brothers regularly raise money from the capital markets under the protective umbrella of Rapid Synergy and YNH, then siphon the money out in these Shady Joint Ventures. These funds have a cost that is well beyond the company’s capability to pay.
From the public records, it appears clear that the RM1 Billion is not just sitting around. Much of it is used to manipulate the stock price of YNH and Rapid Synergy. Much of the trading can be linked to one or another of the YU Syndicate members.
The Yu Syndicate keeps trading in shares covertly using proxies and posers to increase the share price. They lose money in doing so. Why else would the P/E ratio of YNH exceed 280 and Rapid Synergy P/E ratio exceed 540? Impossible numbers to achieve for a free trading company that collectively makes less than a typical Mcdonald’s outlet.
Why do they need to do this? Well, that comes down to pledging shares to lenders for additional personal borrowings. Greed. A second dip at the collateral. Not only can the company leverage the assets themselves by issuing bonds and borrowing, but they can use the same collateral in the form of ownership shares to borrow against again.
I would not want to be a lender based on the obviously manipulated Shares of YNH and Rapid Synergy.
YU Syndicate Directors have created these Joint Ventures with various parties where they deposit YNH cash totaling RM952 million in 2020 and this number increased to more than RM1 Billion in 2021. This money is “for development work which has yet to commence”. So why pay for it 10 or more years in advance? Who does that but crooks?
If these Joint Ventures were not all Related parties as YNH Claims, why would they go to such great lengths to do deals that make no business sense with outsiders? Then give away RM1 billion to projects that are imaginary and far from ever being a reality?
Where is the check and balances in this company? It is a gross dereliction of duty to shareholders for Directors to squander assets like this. Most of these Joint Venture companies have almost no paid Up capital to support such Deposits in the event a legal recovery is required. What educated businessman would invest in such a venture?
If you and a friend are building a house together, but you have not started the project, would you give your friend all the funds needed to build the house in advance and then wait 10 years to decide if you want to build it or not? I think not.
In business, we pay things out based on milestones and cash flow needs. We protect our cash assets. it is the duty of a Director of a Public Company to always protect its assets and Shareholder Value.
So other than dubious intent, what purpose would YNH Controlling Shareholders and Directors YU KUAN HUAT and YU KUAN CHON risk pumping out RM1 Billion into 18 different connected companies with zero development activities or cost and just leave the money for years and years? Nobody would. Just follow the money to find the answers.
What is the benefit to the shareholders? I mean the ones who are not controlling the funds outside of YNH. I really see no benefit to YNH or its shareholders. In our humble opinion, this looks like a criminal breach of trust and duties by directors. But this is something that needs to be determined by the authorities.
A completely independent, forensic audit of the money trail must be called to examine both YNH dealings and those of the Shady Joint Ventures. Where is the RM1 Billion and what was is was it used for? Who benefited at the end of the money trail?
Any Shareholder can require YNH and its Directors to answer to this situation. Where is the security to YNH for these deposits? Why is it paid out when the project is nothing more than imaginary?
How can YNH get this money back so the company can reduce its borrowing instead of selling its Performing assets? Why do the shareholders allow so much cash to lay about not working for the company for so long?
This is part 4 of a 5 part exposé our team is working on in relation to the YU Syndicate and its business dealings. Information used in this story has been obtained primarily from public and corporate records along with inside confidential sources close to the matter. This investigation is ongoing, and the facts and data will lead us to the truth. Stay tuned for more to come in the following weeks.
If you have information about the YU Syndicate, YNH, RAPID, or other related parties mentioned in this article, feel free to email us. If you are concerned about privacy, please use a new email account dedicated solely to this purpose. Contact us via the contact us links or by email. We welcome public assistance and will go to great lengths to protect our sources.