Adeline Cheng Jo-Ee said she felt foolish and deeply hurt when all the cash and shares given to her and her father by lover John Soh Chee Wen were “wiped out” after he had asked her to invest in shares of Blumont Group.
Blumont was one of the three stocks collectively known as BAL that crashed spectacularly back in 2013. The other two stocks were Asiasons Capital and LionGold Corp.
Cheng was one of the witnesses who took the stand recently at the long-running trial of Soh who is accused of allegedly manipulating the BAL stocks with co-accused Quah Su-Ling, who is also Soh’s mistress.
LionGold is now known Shen Yao Holdings under new shareholders while Asiasons was delisted after being renamed Attilan.
Cheng told the court how her relationship with Soh became more intimate back in 2012 after he had helped her resolve a problem with a key client of hers, Neo Kim Hock.
Neo was the former chairman of Blumont and his trading account was managed via Cheng’s firm, Alethia Capital. Neo had to top up a margin shortfall within just a fortnight after his Credit Suisse trading faced a severe and sudden tightening.
“Mr Neo was very upset with me and didn’t even want to talk to me, but we had to get the shortfall regularised,” recalled Cheng. “I had no choice but to talk to somebody who could mediate, and that was John,” said Cheng, referring to Soh, who was an “investment advisor” to Neo.
“He became like a saviour to me. That’s when we started to become more intimate,” Cheng told the court.
Cheng a ‘lifesaver’ to Quah
Before starting Alethia Capital in 2012, Cheng had worked at financial institutions ranging from Prudential Bache; Salomon Smith Barney; UBS; HSBC; and ING Private Banking. Cheng was also running another entity called Alethia Asset Management, described as a family office used by Cheng’s own father to manage the family’s money.
Cheng first met co-accused Quah Su Ling in 2011 at a mining conference organised by HSBC. The two women were introduced by Roger Poh, who used to manage investor relations at LionGold. The company was then starting to undertake a spate of acquisitions of mining assets.
According to Cheng, she got off nicely with Quah and they kept in touch even after she left HSBC as she saw Quah as a potential business contact. For example, in a message in September 2012, Cheng wrote to Quah: “Hi big sister. So long never catchup. When r u free?”
Sometime in the middle of 2012, Cheng bumped into Peter Chen, LionGold’s director of business and corporate development, on her way to Kuala Lumpur. They shared a ride from Subang airport into the city and along the way, Chen stopped by Soh’s office in KL and introduced Cheng to Soh as “investment advisor” to Neo and a certain Dato Idris, her two Alethia clients.
Cheng recalled she was actually “a little bit afraid” of talking to Soh. “He is always busy and wanting to get things done, and I felt that I was not at the same level as him, so I didn’t really want to talk so much with him,” she told the court.
Soon, the two got closer at both the business and personal levels. Cheng, for one, helped Soh and his associates arrange credit lines with various other institutions such as Credit Suisse and UBS via the multiple accounts managed by Cheng. The court was shown how Cheng, drawing on her experience in wealth management, helped convince the banks to take BAL shares as collateral in exchange for extending credit lines. The court was shown messages by Cheng such as “I can do things under the radar like a submarine”; “If u want long-term credit line, must play their game”; and “I can mix with opening accts for other clients, do other things 1st”.
Apparently, Cheng was successful in solving some of Quah’s problems. One of the messages Quah sent Cheng was, “Wah! U lifesaver!”, to which Cheng replied, “Can trade already sis!!”
In love with the same man
As Cheng got romantically linked with Soh, she soon discovered that Quah and Soh were in a relationship dating back to 2000. Even though Cheng and Quah were calling each other “sis”, tensions soon grew. Cheng told the court how she and Soh created a “special email account” to be used by two of them. Around May 2013, Cheng realised she could not log into the account as Quah had changed the password as the account recovery email address and phone number belonged to Quah. So, Cheng proceeded to change it, but on the very same day, Quah changed it back again. “We hardly talked to each other after that. John said to give him time to sort it out,” Cheng told the court.
In one of the numerous messages sent by Cheng, she acknowledged Quah had a special place in Soh’s heart, “He must have liked her a lot ... it was the perfect opportunity for her: he was in SG alone without a wife, left Msia bcoz of some problems with Mahathir, running 3 listco’s in SG ... needed nominees in SG he could trust his assets with, being introduced to her ... She brought in many of her friends, they all became his trusted nominees till today ...”
Former prime minister Dr Mahathir Mohamed was mentioned because it was Soh who told her he was a strong Anwar Ibrahim supporter, and in 1998, the former deputy prime minister was removed by Mahathir.
Cheng was also aware many of the nominees used by Soh to hold his assets in various Singapore-listed companies were actually people with ties to Quah, like her sister Quah Su-Yin, former CEO of ISR Capital, as well as Su-Yin’s husband. ISR has since been renamed Reenova Investment Holding.
“He seemed to be making a lot of decisions in LionGold, Blumont and Asiasons. So I would assume that he actually held substantial shares in his companies, but he didn’t want people to know that, and he had nominee shareholders,” said Cheng, who also believed Quah was Soh’s biggest nominee for more than a decade.
When deputy public prosecutor Jiang Ke Yue asked whether Cheng and her father acted as Soh’s nominees as well, Cheng initially denied it.
However, she was shown a series of messages between her and a personal friend Lim Mei Yi, where she said, among other things, that she was afraid that Quah would discover “that my dad & I have assets & r his nominees”.
In addition, when Cheng was asked by her friend Lim whether Quah was holding $135 million on behalf of Soh “as a nominee with a trust instrument”, Cheng responded that there was “no trust. Just BVI with her as UBO” and that “All his nominees same, including my dad”. “BVI” refers to the shell entities incorporated in the British Virgin Islands and “UBO” refers to “ultimate beneficial owners”.
Confronted with these messages, Cheng said Soh had requested that she and her father be shareholder nominees although she insisted that did not happen. Cheng was then shown a message where she had told Lim “my dad’s acct has $70m assets from him with $30m loan, but just nominee.”
“So it has happened, Ms Cheng, isn’t it? Can you tell us the truth?” DPP Jiang pressed.
‘For what? For us’
During the relationship, Soh had urged Cheng to invest in BAL too. According to Cheng, Soh told her not to waste time with the products pushed by the private banks, but look at the BAL stocks instead. When she pointed out that their prices had already gone up by a lot and asked if there was more upside, Soh told her not to worry, adding “Yes, it will — it’s going to be a star”.
“So I said, ‘But how much should I buy, at what price should I buy?’ He said, ‘I’ll tell you’,” said Cheng. According to Cheng, between February and May of 2013, she leveraged $8.6 million into $56 million which were used to buy BAL stocks.
In February 2013, Soh told Cheng he would transfer $3 million cash to her and suggested that she buy a property in the Mohamed Sultan Road area where LionGold’s office was located and where Soh spent a lot of his time. “I was a little bit taken aback because the relationship was young, but it was becoming intimate. And then I said, ‘For what?’ And he said, ‘For us’,” recalled Cheng.
However, the $3 million was only transferred in August 2013. “It was parked in the account for some time, and then every time I said, ‘I’ve seen this property, I saw that property’, he said, ‘Wait, wait, wait’. Eventually he asked me, ‘So why don’t you buy some BAL shares as well?” So it was used to purchase the BAL shares,” said Cheng.
At a subsequent hearing, Cheng clarified that besides the $3 million, Soh also transferred a total of $12 million in two tranches to her father’s account. This led the prosecution to question why Cheng’s evidence was “evolving” and why she could remember the $3 million but not $12 million until statements she made to the police were presented to her.
“I’m telling you as best as I can remember it, and the $3 million stuck in my mind because for a woman who was told to buy a property, that is something I hold very close to my heart. And when you have an emotional attachment to certain events, that’s what you remember the most,” explained Cheng, who holds a master’s degree in psychology.
In the end, Cheng did as Soh told her and leveraged that $3 million from Soh to buy $9.8 million worth of Blumont shares on Sept 27, 2013. She said she was able to remember the exact date because just a few days later on Oct 2, 2013, BAL shares hit an all-time high. “I asked him, ‘Are you sure?’ He said, ‘Yes, it is the Berkshire Hathaway of Asia, don’t worry’.”
Within days, the BAL stocks came crashing down, destroying some $8 billion in market value. According to Cheng, everything, including all the cash and shares given by Soh to her and her father, was “wiped out” and she and her father suffered losses of up to $10 million.
A worse revelation was to follow. Through media reports, Cheng read that Quah’s Blumont shares, which were pledged as collateral, were being forced sold by Goldman Sachs in the lead-up to the crash. In effect, Soh was asking Cheng to help support the shares. “It dawned on me how foolish I was and became very painful. The person I love and trust asked me to catch a falling knife,” said Cheng.
