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Honestbee is taking legal action against ex-chief executive officer (CEO) Joel Sng and ex-director Jeffrey Wong for breach of fiduciary duties.

According to a media advisory by Honestbee, the company has been investigating various transactions made by Sng and Wong when they were part of the company.

It discovered "numerous irregularities" which warrant further investigation.

Purchased house in Japan for S$1.6 million

One of these transactions included the purchase of a house in Niseko, a town in Hokkaido, Japan.

The house was apparently purchased under Sng's name, in December 2015.

According to Honestbee, the house was paid, on Sng's instruction, by the company.

The house was purchased at US$1.1 million (approximately S$1.6 million), including acquisition tax.

Slightly over two years later, in February 2018, Sng attempted to regularise the purchase by entering into an agreement with Honestbee.

In the agreement, he indicated that he was appointed by Honestbee to purchase and hold the Niseko property on its behalf.

"The Niseko purchase was not disclosed to the then-Board or shareholders of Honestbee until September 2018," said the company, adding that it found no "apparent real benefit" or "commercial advantage" to the purchase of the house at that time.

S$51,000 monthly expenses for separate company

In May 2013, Sng and Wong started another company called The Cub SG Pte Ltd, with Sng owning 70 per cent of the shares and Wong owning the remaining 30 per cent.

The Cub entered a tenancy agreement with LHN Space Resources Pte Ltd, the landlord of Habitat by Honestbee.

The tenancy agreement was for:

1. A unit at 34 Boon Leat Terrace
2. Open Space, a unit above Habitat by Honestbee.

Honestbee paid for all security deposits and transactions, including stamp duty, for the tenancy agreement.

The company also paid the monthly rent and expenses totalling about S$51,000 per month from Oct. 2017 to Oct. 2018.

The architectural design fees for the premises were also paid for by Honestbee.

Sng did not disclose The Cub's payment arrangement to the then-board or shareholders before Sep. 2018.

These two tenanted premises, said Honestbee, were left empty since October 2017 and of no real use to the company:

"There was no real benefit or commercial advantage for the company to make payment of the tenancy transaction expenses and rent, as well as any other fees or payments for the premises, on behalf of The Cub."

Paid S$7.4 million for e-wallet solution

In January 2017, Sng incorporated an e-wallet solution company on his own called PayNow Pte Ltd.

Because Sng had presented PayNow as a viable product that was ready for launch and worth S$4 million as a company, Honestbee then entered into a "share subscription agreement" and a "partnership" agreement with PayNow.

Under this agreement, Honestbee subscribed for 20 per cent of the ordinary shares with Sng owning the rest of 80 per cent.

Honestbee had also paid S$1 million for the "share subscription".

This was not disclosed to the then-board and shareholders of Honestbee before Sep. 2018.

Honestbee eventually found out that Sng also instructed Honestbee to pay a total of S$6.4 million for the purported purchases of Sng's shares in PayNow.

These were made in transactions between August 2017 and February 2018.

This means that Honestbee had spent about S$7.4 million on the e-wallet solution company -- whose product was later found to be "rudimentary".

"Honestbee has since found that PayNow did not during that time have a minimum viable product that was ready to launch. In fact, the said product that PayNow had produced was only at a rudimentary stage."

Believed to be cause of losses

According to the advisory, these transactions have caused "loss and damage" and have contributed to the financial difficulties faced by the company.

The company has not received any substantive response from either Sng or Wong.

Honestbee said that it intends to and will pursue any other questionable transactions that may come to light in the course of its investigations.

Earlier this year, Honestbee had reportedly laid off between 70 to 80 per cent of its staff.

And apparently, the company is now looking to open a pizza takeaway joint in Siglap.

Top image from Honestbee.