An independent investigator appointed by troubled Mandarin Resources has uncovered a series of alleged irregularities involving previous controlling shareholder Yeung Kang-lam. The investigation, by Charles Chan, Ip & Fung CPA, was initiated by Mandarin Resources' new management led by chairman Chen Chak-man who took control of the company after buying a 33.33 per cent stake in June. The report, partly published in a company announcement, found Mr Yeung was involved in a series of alleged irregular activities when he was still at the helm. Among these was his service agreement, made in June when Mr Yeung had lost his majority stake to Mr Chen. The agreement was suspected to be designed to provide a golden parachute. Despite the company's serious cash flow problems, it had stipulated an annual director's fee of HK$2 million regardless of the company's profitability. His contract also specified a fixed term of four years, conflicting with Mandarin Resources' company articles which require one-third of directors to retire from office by rotation each year. Meanwhile, Mr Yeung allegedly instructed then-director James So Yiu-cho, former secretary for recreation and culture, to renew almost all staff members' employment after his stake had been sold. The renewal resulted in prolonging their termination lead-time from one month to three months. 'The change . . . would at least create difficulties for any new management . . . since the group would have either to incur a greater sum in compensation or to suffer from a much longer termination period,' the report said. The company said Mr So explained that he was not aware of the change when he asked staff to sign the new employment letters. Meanwhile, Mr Yeung was also involved in suspected improper trading activities conducted by some Mandarin subsidiaries, according to the report. It said that those trading activities might constitute notifiable or even major transactions. 'We cannot rule out the possibility that some or all of these transactions . . . may have involved connected persons,' the report said. Despite Mr Yeung denying his involvement, the report said the subsidiaries' management had claimed he had given instructions to manage the securities trading businesses. Mandarin Resources said the stock exchange was reviewing the report and reserved its rights to take further action.