Photo: Bloomberg
The long-running trial of John Soh Chee Wen and Quah Su-Ling, alleged mastermind and co-conspirator behind the manipulation of three penny stocks in 2013, has entered a new phase.
Soh took the stand on May 11. Over 169 days since the trial started on March 25, 2019, Justice Hoo Sheau Peng heard the prosecution make its case.
On April 28, Justice Hoo found that the prosecution had presented a case to answer and called upon Soh to defend the 188 charges he faces and Quah to defend the 177 charges she faces.
At the close of the prosecution’s case, both accused made an application of no case to answer in respect of 168 of the charges against Quah and 175 of the charges against Soh.
Soh has been in remand since Nov 25, 2016, and was charged the following day. Soh and Quah are alleged to have orchestrated Singapore’s largest share manipulation scheme involving the three penny stocks Blumont Group, Asiasons Capital and LionGold Corp, collectively known as BAL, from 2012 to 2013. Over $8 billion in market value was destroyed when the three stocks crashed suddenly on Oct 4, 2013. Asiasons has since been delisted while LionGold is now known as Shen Yao Holdings.
Generals and a blue-eyed boy
A total of 96 witnesses were called to the stand by the prosecution. They included close associates of Soh and Quah like former DMG Singapore CEO Nicholas Ng Yick Hing, who was briefly CEO of LionGold; Blumont’s former executive director James Hong Gee Ho; as well as Goh Hin Calm, the former interim CEO of IPCO International who was originally charged along with Soh and Quah before pleading guilty and turning into a prosecution witness.
A key witness was Dick Gwee Yow Pin, who had known Soh for nearly four decades and gone through thick and thin as friends. Gwee told the court how Soh tried to get him to shoulder the blame when investigators from the Commercial Affairs Division (CAD) closed in. “I smiled, I shook my head, and I walked away,” said Gwee when asked by deputy public prosecutor (DPP) Jiang Ke Yue how he responded.
Other witnesses also included a small group of brokers who were allegedly actively helping Soh and Quah make trades. They included Ken Tai Chee Ming, Leroy Lau Chee Heong, Henry Tjoa Sang Hi, Wong Xue Yu and Gabriel Gan Tze Wee, whom Soh called one of his “generals”.
A few of the senior executives of the listed companies linked to two accused testified as well. These included IPCO International’s (since renamed Renaissance United) former CFO Carlson Clark Smith and LionGold’s former director of business and corporate development Peter Chen Hing Woon, and Steve Phuah Cheng Hock and Richard Chan Sing En, who were both at ISR Capital, now renamed Reenova Investment Holding.
Each had played different roles. Chan, dubbed Soh’s “blue-eyed boy”, was good at sourcing for restructuring deals on behalf of Soh and his “Lakeview Club” group of close associates like Blumont’s former executive chairman Neo Kim Hock. Meanwhile, Chen admitted to the court how as a lawyer he had tried to climb up the corporate ladder by latching on to Soh. Both Chen and Chan had held numerous trading accounts allegedly used by Soh and Quah to trade.
Angmoh’s got cold feet
Not everyone did as instructed though, like IPCO’s former CFO Smith. Quah told Gan, one of the brokers, that Smith the “angmoh was scared” and wanted no part in what she was involved in after he found trading profits were banked into his accounts.
Around a dozen other trading representatives and remisiers, who were lower down the pecking order, testified as well. They included Ong Kah Chye, Alex Chew Keng Chiow and Joe Tiong Sing Fatt. “I simply take orders, asking clients if they are keen to buy, sell, or withdraw,” said former remisier Ng Kit Kiat, who was the first witness called.
When the witnesses appeared on the stand, some sang like a canary while others took a decidedly antagonistic stance. In the course of the trial, the prosecutors applied to impeach witnesses like LionGold’s former CEO Ng, Blumont’s former executive director Hong, and brokers Tai and Tiong.
In Ng’s case, many of his earlier statements contradicted what he had said in court. When asked if it was because he could not remember or that he did not know, Ng “made it very clear that this was not an issue of memory; he was asserting that he did not have such knowledge at any point in time,” said DPP Nicholas Tan.
Broadly, the various witnesses recounted how they got to know Soh or Quah and how they soon got involved in trading, being drawn deeper into the network as days went by and euphoria over surging prices took on an unstoppable momentum of their own. This was admitted by the likes of Tai, who revealed he did trade for his own gain but also “felt disgusted” at Soh for turning on his associates after things began to unravel. Gwee allegedly traded actively for his own profit and asked some of the brokers taking instructions from Soh to let Gwee make a minimum level of profits by either buying from Gwee at a higher price or selling to him at a lower price.
Others like Gan told the court how Soh tried to get him to say different things when questioned by CAD. Soh, who faces charges of witness tampering as well, is heard in a series of audio recordings made by Gan, where Soh told Gan what to say when asked.
Witnesses from the various brokerages representing various financial institutions involved in the case — mostly comprising compliance officers — were called to the stand too.
Goldman, enabler and victim
The court was shown that Quah and several associates, namely Hong and Blumont’s Neo, had opened trading and financing accounts at foreign banks offering such services.
Of particular interest was Goldman Sachs. Besides charges of share manipulation, Soh and Quah faced cheating charges too. Specifically, they were alleged to have deceived Goldman and Interactive Brokers into extending more than $170 million in margin financing to their accounts with BAL shares used as collateral, and for “dishonestly concealing” from the two financial institutions that BAL shares were manipulated by them.
Soh’s lawyer, N Sreenivasan, tried to cast doubt on the due diligence conducted by Goldman on clients. Jason Moo, Goldman’s representative at the stand, said “quality checks” were conducted before Goldman onboard clients, who must also be “people of good standing” besides having a certain level of assets”. “You see, I’m trying to find out whether is it just the colour of money that counts or the quality of clients that count,” said Sreenivasan.
Over several days of intense cross-examination, Moo, who is now with Julius Baer, busily fended off Sreenivasan’s attempt to pin the cause of the crash on short-selling done via another account under another Goldman Sachs client.
The court was told how on Sept 27, 2013, with BAL share prices surging to new highs, Goldman decided to be no longer “comfortable” lending to Quah and Hong, whom it had already extended loans of $69.36 million and $73.23 million respectively.
On Oct 2, a day after the Singapore Exchange queried Blumont to the effect if its share price was worth that much, Goldman decided to be “in a position to start selling the BAL shares if the account holders were not able to find alternative financing to repay the loans.”
When Quah and Hong could not meet the repayment given barely three hours of the deadline, Goldman started selling the shares held as collaterals in their accounts.
Doing it for love
There was plenty of human drama too. The associates and brokers who worked together under Soh told of how they got annoyed or angry with another. Gwee, for example, thought Tai was lazy for not bothering to mask trades and for behaving arrogantly by holding his golf club as Gwee confronted him in Tai’s office.
Other witnesses laid bare their feelings for Soh and revealed sweet nothings whispered by him. Former relationship manager Adeline Cheng Jo-Ee, who was in a romantic relationship with Soh, told the court how she regarded him as her “saviour” after the latter stepped in to defuse the wrath of one of her clients, Neo of Blumont.
The two soon got close at a personal level. Cheng told the court how Soh even asked her to look for a property near the LionGold office to buy, where the bulk of the alleged share manipulation activities were carried out. “I was a little bit taken aback because the relationship was young but it was becoming intimate. Then I asked, ‘For what?’ and he said, ‘For us’,” recalled Cheng.
As the prices of the three penny stocks, which had already gained significantly, came under selling pressure, Soh urged Cheng to buy more instead. When the crash happened, Cheng and her father suffered losses of some $10 million. “It dawned on me how foolish I was and it became very painful. The person I love and trust had asked me to catch a falling knife,” said Cheng, who also told the court she had a tense relationship with Quah, who was romantically involved with Soh too. The love-triangle narrative was confirmed by other witnesses like Chen of LionGold and Cheng’s assistant, Tan Ai Bee.
Wash trades, overvalued shares
To back up the witnesses’ testimonies and to build its case, the investigators and prosecutors have combed through extensive documentary evidence comprising over 2 million emails, half a million trade orders, and thousands of telephone records and financial statements.
The court was shown a whole series of mobile messages and call transcripts, and even a spreadsheet that contained more than 1,000 entries on the funds coming in and paid out to the various trading accounts. This spreadsheet, maintained by IPCO’s Goh, described as the “treasurer” of the alleged share manipulation operations, was shown multiple times to different witnesses.
The court has also heard from CAD investigating officer Sheryl Tan and GovTech analyst Esther Gao as well as two expert witnesses. One of them Michael Aitken, who created the SMART trading surveillance system used by the Singapore Exchange, told the court how there was a prevalence of so-called “wash trades” were seen in the BAL stocks in the months leading up to the crash. With a firm hold over numerous trading accounts trading those shares, a false market has thus been created.
The other expert witness, John MH Ellison, estimated that on Oct 1, 2013, the market price of Blumont was trading at as much as 3,112% of his fair value estimates. For Asiasons Capital, it was 1,514% and for LionGold, 464%.
