ON Sept 25, candy maker Khee San Bho said in an exchange filing that initial findings by forensic auditors at BDO Governance Advisory Sdn Bhd reveal what appear likely to be fraudulent activities. These include fictitious sales in- voices of RM39.45 million as well as purchase invoices amounting to RM4.47 million that are not supported by stock card movements used as a basis for the drawdown of credit facilities. All applications for the credit facilities were approved by Khee San's former substantial shareholder and chairman Datuk Sri Liew Yew Chung. Liew was also CEO and substantial shareholder of London Biscuits Bhd (LBB), which is now in liquidation. Khee San was a 20% associate company of LBB until Dec 20, 2019. The BDO auditors had been tasked by Khee San in June to review its credit facilities in default and the validity of the invoices and supporting documents relating to the credit facilities. All this came to light because of a writ of summons and statement of claim by Bank of China (M) Bhd against Khee San's wholly-owned subsidiary Khee San Food Industries Son Bhd (KSFI) for a total of RM14.62 million. The writ was served in early August 2019. As it fought the case, Khee San was on the lookout for new investors to help solve its financial woes. The company disclosed two potential deals. One was a share sale agreement with Wah Kong Corp Sdn Bhd in September 2019 and the other was a proposed private placement of a 45.11% interest to Mamee-Double Decker (M) Sdn Bhd in December. Unfortunately, both fell through. From there, Khee San's problems spiralled. Shortly after the proposed private placement lapsed in June 2020, Khee San was served with a writ of summons and statement of claim by another bank for defaulting on its payments. On June 22, Alliance Bank Malaysia Bhd served a claim for RM4.7 million from Khee San and KSFI. Then on June 25, Khee San announced that it had engaged BDO to review two specific areas of the company's books for the period of Oct 1, 2018 to March 31, 2019. Specifically, BDO was to look into these areas: i) To review the validity of purchase orders, invoices and other relevant documents used as the basis to draw down financing from its bankers; and ii) ii) To trace the movement of funds from the receipt of the drawdowns to any subsequent withdrawals and transfers of these funds. Khee San said the probe was necessary because of the discrepancies in the supporting documents used to draw down the banking facilities. Notably, former chairman Liew was already out of the picture at this point, having resigned on Sept 13, 2019, citing "burnout stress syndrome". This coincides with his resignation from LBB as well At Khee San, two board members had resigned several months before Liew. They were Leslie Looi Meng (resigned on July 3) and Huang Yan Teo (July 26). The two were independent non-executive directors of Khee San and also held directorships in LBB. By Dec 12, Liew had also ceased to be a substantial shareholder of Khee San. His direct equity interest in Khee San, based on its 2018 annual report, amounted to 10.58%. After announcing the probe into the company, Khee San was served a letter of demand by OCBC Al-Amin Bank Bhd for defaulting on payment at its subsidiary's level. KSFI had defaulted on banking facilities totalling RM4.96 million from the bank. Khee San also disclosed that it had defaulted on loan payments amounting to RM73.5 million in the form of bankers' acceptance and overdrafts with eight banks. The banks are HSBC Bank Bhd, Bank of China, UOB Bank Bhd, Maybank, CIMB Bank Bhd, OCBC Bank, Standard Chartered and Alliance Bank Malaysia Bhd. When stating the reason for the defaults in its exchange filing, Khee San said the "funds earmarked for the repayments were then channelled to the then holding company LBB". The July 6 announcement was followed by queries on the defaults from Bursa. The answers highlighted that former Khee San chairman Liew, who was also CEO of LBB, not only directly handled all matters related to banking facilities, but even Khee San's accounting matters were "handled" by LBB's accounting department. Were the two listed companies operating out of the same place? Khee San and its