SEC readies preliminary findings of 2GO review

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SEC chair Teresita Herbosa: review findings on 2GO Group, Inc., out in February. BUSINESSWORLD FILE

MANILA – The Securities and Exchange Commission (SEC) will release next month initial findings of its investigation on the accounting issue involving logistics company 2GO Group, Inc., SEC Chairperson Teresita J. Herbosa said in a recent interview.

The probe ran longer than expected, prompting the regulator to add another person to the four-man task force conducting the review, she said.

“There are quite a number of issues — I think about 10 — that we have to clarify,” Ms. Herbosa said, without elaborating due to the confidential nature of the probe.

The corporate regulator had said the investigation could last about a month.

“We have to go back and verify each one, find out if the representation made regarding every item — whether it is the amount or the notes were really sourced from working papers, which in turn were sourced from the company,” the corporate regulator’s chief said.

“We’ll be coming up with the initial findings in January.”

SEEKING CLARIFICATION

The new management of 2GO, led by businessman Dennis A. Uy’s Udenna Corp. and Henry Sy, Sr.’s SM Investments Corp., had hired SyCip Gorres Velayo & Co. (SGV) to conduct the review after they took over the logistics company in April.

A special audit of 2GO’s financial statements revealed that the company underreported debt and inflated non-cash assets, resulting in additional P1 billion in income in each of the past two years.

In July, the SEC launched an investigation into the financial reporting issue. A month later, the SEC’s Market and Securities Regulation Department and Office of the General Accountant sought written clarification from the previous management of 2GO, as well as from auditors R.G. Manabat and SGV, before making any conclusion in its investigation of the discrepancy in 2GO’s financial statements.

Among others, the probe will determine if cases have to be filed against previous principals of 2GO and its auditors.

RG Manabat & Company, the local unit of accounting firm KPMG, stood by its audit and the camp of the former 2GO president, Sulficio O. Tagud, Jr., has denied allegations of wrongdoing.

If proven that the company had violated provisions of the Securities and Regulation Code, 2GO could face of fine of at least a million pesos, with an additional P10,000 fine for every day since the mistake was discovered.