Synergy Construction owes its hundreds of creditors more than S$40 million (US$23.5 million) and is believed to be the first government-linked business to face such problems, the Straits Times said.

The newspaper quoted a spokesman for Jurong International, a major shareholder, as saying Synergy's debts and accounting irregularities forced the company into insolvency last week.

"After much deliberation ... the directors of Synergy have formed the view that the financial impact masked by these irregularities makes it unfeasible to immediately pursue any possibility other than the appointment of provisional liquidators," the spokesan said.

Financial problems at Synergy were first made known to Jurong International last month and the matter was duly reported to the police arm that investigates white collar crime, the Commercial Affairs Department.

"Substantial losses were also intentionally hidden from Jurong International and only revealed during the same period," the spokeswoman said.

Synergy's 11 construction projects will be stopped during the police investigation, according to the newspaper.

Officials at the Commercial Affairs Department, Synergy and Jurong International, which is a subsidiary of state-run industrial landlord JTC Coropration, could not be immediately contacted by AFP to confirm the report.

Many vital sectors of Singapore's economy are dominated by government-linked companies, with the nation enjoying a reputation for having one of the cleanest corporate environments in the world.

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