Singapore-based troubled delivery startup Honestbee on Tuesday announced that it has sought legal advice and taken action against ex-CEO Joel Sng and ex-Director Jeffrey Wong, according to a statement.
Honestbee said it has sent letters of demand for breach of fiduciary duties to Sng and Wong after the company discovered numerous “irregularities that call for further investigation”.
“Since their departures, Honestbee has been investigating various transactions entered into by the company while Sng was CEO and Wong was Director,” the company said. Sng left Honestbee in May 2019.
Honestbee said it has discovered that Sng purchased a house in Niseko, Japan under his name, and the company, on his instructions, paid the purchase price of about $1.1 million.
The startup said there was no apparent real benefit or commercial advantage for Honestbee to purchase the property in December 2015. The acquisition was also not disclosed to Honestbee’s board or shareholders until September 2018.
Earlier, in 2013, both Sng and Wong started a company called The Club SG Pte Ltd, with the former CEO owning 70 per cent share and Wong owning the remaining 30 per cent. The Club then rented space in the same venue as Habitat, Honestbee’s brick-and-mortar grocery store.
Honestbee said it paid for all security deposits and transaction costs for the tenancy agreement and the monthly rent and expenses from October 2017 to October 2018. However, since October 2017, the tenanted premises were left empty.
Additionally, Honestbee disclosed that Sng incorporated a company called PayNow Pte Ltd in January 2017 and claimed that it was ready for launch and that the startup was worth S$4 million.
Honestbee then entered into a share subscription and partnership agreement with PayNow, paying S$1 million for the 20-per cent ordinary shares of the company that Sng said was developing an e-wallet solution.
But there was no viable product that was ready to launch as claimed by Sng, and Honestbee further discovered that the product that PayNow produced was only at a rudimentary stage.
Sng did not disclose any of the PayNow transactions to Honestbee’s then-board or shareholders until September 2018, but the company had already paid approximately S$7.4 million in total to subscribe and acquire Sng’s 100 per cent shareholding of PayNow.
“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,” the company said.
Honestbee said it has not received any response from either Sng or Wong and added that it will continue to pursue any other questionable transactions that may come to light in the course of its investigation.
Honestbee is no longer operational regionally. During its heydays, the Singaporean grocery startup was present in multiple markets across Hong Kong, Taiwan, Thailand, Indonesia, Malaysia, Bangkok, Philippines, and Japan.
In January, Honestbee signed an agreement with multiple existing investors to receive about $7 million in capital to pay off its creditors in a cash and equity deal to clean up its balance sheet.
These investors were FLK Holdings, a US incorporated company backed by Brian Koo, Formation Group Fund I, and Formation Group (Cayman) Fund I. Brian Koo is Honestbee’s former chairman and interim chief executive.