SINGAPORE — Embattled startup Honestbee said it has sought legal advice and sent letters of demand to its former Chief Executive Officer Joel Sng and ex-director Jeffrey Wong, alleging breach of fiduciary duties.
Honestbee said it has been investigating various transactions entered into by the company while Sng was CEO and Wong was Director of Honestbee, according to an emailed statement on Tuesday (24 March).
During the process, Honestbee “discovered numerous irregularities that call for further investigation,” the statement said.
The first irregularity was the purchase of a house by Sng in Niseko, Japan in December 2015 under his name. On his instructions, the company paid US$1.1 million for the property and other running costs.
Honestbee alleged that there was “no apparent real benefit or commercial advantage” for the company to buy the house and make payment on behalf of Sng for it.
In February 2018, Sng “attempted belatedly to regularise” the purchase by creating an agreement with Honestbee, stating that the company had appointed him to act on its behalf to purchase and hold the property.
The purchase was not disclosed to the then-board of directors nor shareholders until September 2018, Honestbee claimed.
The second claim is regarding the rental of commercial space by a company called The Cub SG set up by Sng and Wong in May 2013, Honestbee said. Sng held 70 per cent and Wong owned the remaining 30 per cent in The Cub.
In October 2017, The Cub rented space in 34 Boon Leat Terrace #02-01 and Open Space from LHN Space Resources, which was also the landlord of habitat by honestbee, a supermarket that Honestbee used to operate.
On behalf of The Cub, Honestbee paid for the costs of renting the property, including the deposit, monthly rental, renovation and expenses, of about S$51,000 per month from October 2017 to October 2018.
Sng did not disclose this arrangement to the then-Board nor shareholders until September 2018.
Honestbee said since October 2017, the tenanted premises were left empty and were of no real use to it.
The third action involved a company called PayNow, which Sng incorporated in January 2017 with the goal of developing an e-wallet solution.
Sng said PayNow had a viable product that was ready for launch, and that the company was worth S$4 million. Honestbee subscribed for 20 per cent of the ordinary shares in PayNow and paid S$1 million for the stake.
Honestbee paid a further S$6.4 million between August 2017 and February 2017 to buy Sng’s remaining stake in PayNow, at Sng’s instructions. In total, the company paid S$7.4 million to acquire PayNow.
Honestbee claims it has since found that PayNow did not have a “minimum viable product that was ready to launch” during the period.
“It is believed that the above transactions have caused loss and damage to the Company, and have no doubt contributed to the financial difficulties of Honestbee,” according to the statement.
“The breaches outlined above are non-exhaustive and based on the company’s ongoing internal investigations to-date,” Honestbee said. The company said it has not received any substantive response from either Sng or Wong.