Stark Corp, a Thai-based company specialising in industrial cables, discovered a staggering 15.6 billion baht (US$426 million) worth of irregular transactions across its divisions, following a mandated special investigation. The transactions were identified after the firm was rocked by an accounting scandal and subsequent debt defaults.
Stark’s cable-manufacturing subsidiary, Phelps Dodge International (Thailand) Ltd, incurred damages amounting to 12 billion baht across 2021 and 2022 due to over 200 irregular transactions, as revealed in a late Friday exchange filing. Stark’s two other units were also found to have over 3.6 billion baht worth of irregular transactions.
The discovery of accounting irregularities has led to an intensifying criminal inquiry and a class-action lawsuit against Stark. The company’s inability to meet its 39 billion baht liabilities, along with fraud allegations against its executives, has caused a severe confidence crisis in regulators and Thailand’s bond markets.
According to Stark, the irregularities detected at Phelps Dodge primarily stemmed from payments for fictitious raw material purchases and undocumented loans. The irregular transactions in Stark’s two other units were associated with fraudulent product payments.
Stark revealed that it has yet to complete an audit of the 10.7 billion baht generated from bond sales and the 5.6 billion baht from private share sales. As per the Securities and Exchange Commission (SEC) requirements, the company submitted an extended-scope special audit report, the deadline for which had been extended multiple times.
Following a 99% plunge in share value this year, trading of Stark’s shares was suspended. The company reported restated financial results in June, revealing combined losses of 12.6 billion baht for 2021 and 2022 and a situation where liabilities exceeded assets.
In July, the SEC ordered the seizure of assets belonging to Stark, its largest shareholder Vonnarat Tangkaravakoon, and some past executives allegedly involved in account falsification. Vonnarat, a member of one of Thailand’s wealthiest families, pleaded not guilty in August, refuting allegations of his involvement in the accounting scandal, Bangkok Post reported.
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