IT IS all too easy for listed companies to blame all their financial woes on the global credit crunch and the greedy bankers who led them astray.
Take electrical appliance distributor TT International.
Judging by the tone of the statement announcing its trading suspension on Wednesday, it seemed as though bankers should take the lion's share of the blame for its current plight.
Its top executives - husband- and-wife team Mr Sng Sze Hiang, executive chairman, and Ms Julia Tong, executive director - appear literally driven to the wall by the forced-sale of 9.3per cent of TT's total outstanding shares by financial institutions between February and last month.
Also, Barclays Bank had given notice that it was planning to enforce its rights to seize another 31.3per cent of the company's shares belonging to them - which would have triggered a change in the management control if the seizure had gone ahead.
For Mr Sng and Ms Tong, the nightmare started last year after they gave personal guarantees to the company's lenders. These guarantees now threaten to crush them as the company's financial woes snowball.
It is difficult not to sympathise with their plight. They painstakingly built up TT and its Akira brand into a household name.
Then, when things got tough, they sought outside help, appointing nTan Corporate Advisory and Wong Partnership last October in a bid to save the firm.
But despite their heartwrenching tale, the big question for small investors is whether they have been well-served by the disclosures made by the company.
Throughout the whole sorry saga, no questions were raised by the Singapore Exchange (SGX) on the various forced-sales of TT shares, or when these shares were pledged to institutions by Ms Tong.
This lapse is strikingly similar to the failures by the bosses of
Sino-Environment and China Sky Chemical Fibre to disclose that they had pawned their stakes in the two respective firms.
A simple disclosure would have sounded the alarm to investors given the huge tranche of shares that had been pledged.
Certain key questions should have been raised over TT's full-year financial results which were released on May29.
Granted, the company had prepared investors for bad news one week earlier by saying it would report a 'significant loss...as a result of the continuous and prolonged global economic and financial crisis'.
But the $230.12million loss TT eventually reported was far bigger than any investor could reasonably expect, given that the first-half loss was just $2.5million.
About $109.4million of the loss was due to trade debts going sour, while foreign exchange losses accounted for $35.3million. Both losses were blamed on the global financial crisis.
But this generalisation raises a big question mark over the company's risk management - how it assesses its customers' financial viability, the manner in which it goes about collecting its debts in good times and bad, and the way in which it manages foreign exchange risks.
Surely, it owes shareholders a better explanation for the huge losses it suffered, rather than shoving the entire blame on the global credit crisis.
Given the awful results, it was not surprising to find lenders trying to grab anything of value to sell to cut the outstanding loans TT owed them.
Under such circumstances, should the SGX allow the firm to suspend the trading of shares?
Such a ploy will only delay the seemingly inevitable for Mr Sng and Ms Tong: A possible loss of a business they built up with such hard work.
