THE COUNTRY’S corporate regulator will be releasing within the week the results of its investigation on the 2GO Group, Inc., less than a year after the company disclosed accounting issues in its financial results from 2015 until the first quarter of 2017.
“It will be forthcoming by next week,” Securities and Exchange Commission (SEC) Chairperson Teresita J. Herbosa told reporters when asked about the status of the investigation last Friday.
To recall, the SEC launched a four-man task force last July to conduct a probe on the company’s financial reporting issues. A special audit initiated by the new management of 2GO — led by businessman Dennis A. Uy — found the company underreported debt and inflated non-cash assets. This resulted in an additional P1-billion income in 2015 and 2016.
In a disclosure filed in July 2017, 2GO restated its net income for 2015, saying the company’s profit stood at P109.131 million, 90% lower than the P1.08 billion it earlier disclosed in its 2015 annual report.
2GO’s restated net income for 2016 stood at P344.035 million, 74% lower against the P1.34-billion profit it earlier reported.
The special audit further showed that the company incurred a net loss of P264.86 million in the first quarter of 2017, instead of a net income of P267.562 million as previously reported.
Mr. Uy tapped SyCip Gorres Velayo & Co. (SGV) to conduct the review after his team took over 2GO in April 2017, while R.G. Manabat & Company, the local unit of accounting firm KPMG, was the company’s auditor under the previous management.
Following the release of the special audit, 2GO’s then Chief Finance Officer Jeremias E. Cruzabra resigned from his post, and was then replaced by Willam Charles Howell.
Ms. Herbosa earlier said the investigation ran longer than expected, as the commission resolved to clarify around 10 issues that hounded the case.
Should the SEC prove that 2GO has violated the Securities Regulation Code due to this accounting issue, the commission can slap the company with a fine of at least a million pesos, plus an additional P10,000 fine for every day since the wrongdoing was discovered.
2GO is currently being managed by Mr. Uy’s group through Chelsea Logistics Holdings Corp., alongside SM Investments Corp. (SMIC). SMIC holds an interest in 2GO after it purchased a 34.5% stake in its parent firm, Negros Navigation Co., Inc. in April last year.
Aside from 2GO, the SEC said it will also study whether to revoke or impose penalties on RG Manabat. — Arra B. Francia