Shares in mobile phone firm Technology Resources Industries Bhd (TRI) plunged today after the discovery of fake invoices worth more than RM259 million.

In a statement to the stock exchange late yesterday, TRI chairman Mohamad Munir Abdul Majid said the fictitious invoices issued in 1998 and 1999 were found by the company's new directors and reported to police.

Munir said the fake invoices worth RM259.32 million would have an impact on the finances of the company, which owns the country's second top mobile phone operator Celcom (Malaysia) Bhd.

A company source told AFP financial news subsidiary AFX-Asia today: "The invoices are related to capital expenditure".

Investors dumped TRI shares, which dived more than 21 percent at one stage, closed 38 sen or 16 percent down at RM1.97. Volume traded was large by Kuala Lumpur Stock Exchange standards, at 27.65 million shares.

Telekom Malaysia, which owns a 31.25 percent stake in TRI and plans to merge its cellular operations with TRI's, closed down 10 sen at RM7.70.

Negative sentiment

A dealer with a local brokerage said apart from the negative sentiment triggered by the fake invoices, investors were also concerned Telekom might delay a general offer for TRI at RM2.75 a share as part of the mobile merger.

Telekom's chief executive officer Mohamed Khir Abdul Rahman said the merger was still on but declined to comment on developments.

In a telephone interview, he said: "The cellular merger... is progressing as planned."

After the departure of four directors, including former chairman and chief executive Tajudin Ramli, the new board of Telekom has commissioned a series of audits expected to be completed at the end of September.

"Investors expect the audit process to be prolonged, which puts a question mark on the general offer," the dealer said.

The dealer said sentiment on TRI was already weak prior to the allegations about false invoices.

Late last month it was revealed a RM38.7 million payment was made to three former directors, including Tajudin, and two luxury cars were sold for RM1 each to Tajudin and his brother, Bistamam Ramli.

An analyst from a foreign brokerage noted that TRI is expected to restate its results for the period affected by the fake invoices.

'Second Enron'

This would significantly reduce TRI's net tangible assets, he added.

"People are worrying if there are more hidden balance sheet items that have not been uncovered that may affect the valuations," the analyst said.

A senior analyst with a local securities firm likened the TRI disclosure to a "second Enron".

"There is the element of fraud. When dealing with millions of dollars, the board would have the knowledge of it," he told AFP .

The analyst said the impact of the disclosure was still uncertain.

"It all depends on what the new board of directors want to do and if they want to make a meal out of it. If they want to write it off and move ahead, that would bring minimal impact," he said. AFP