Richard Chan, John Soh's blue-eyed boy, ends up saddled with $1.1 mil in trading losses

Chan was among the prosecution witnesses called to testify at the trial of Soh and his co-accused Quah Su-Ling. The pair is accused of allegedly masterminding a massive share manipulation operation involving the counters Blumont, Asiasons Capital (since then delisted) and LionGold Corp (renamed Shen Yao Holdings), also collectively known as BAL. The whole scheme fell apart in early October 2013 when the prices of BAL stocks crashed spectacularly under heavy shorting pressure, wiping out some $8 billion of value in the local exchange.

Deal-maker

Earlier during the long-running trial, the court had heard how Soh and Quah used a network of brokers to control dozens of different accounts to buy and sell to another. The two had also allegedly given trading instructions or received help from a handful of individuals like Chan to run the operation.

Chan was also asked by Soh to negotiate with the banks on behalf of the various account holders on how they could make good their trading losses in the wake of the crash.

Chan and Soh had met through Chan’s cousin back in 2000 after which the two kept in touch. Through Soh, Chan also got to know people such as Neo Kim Hock, whom Chan would introduce to Blumont as an investor, and James Hong, executive director of Blumont.

In his cross-examination, N Sreenivasan, Soh’s lawyer, put it to Chan that it was he who tried to “plug” himself into Soh’s network of associates.

“I don’t socialise with them,” said Chan.

“They’re older than you, generally?” asked Sreenivasan.

“Yeah, much older,” said Chan. “Don’t say ‘much’, my client’s only 61, okay? How old are you, Mr Chan?” asked Sreenivasan.

“Fifty-four,” replied Chan.

“The point I would make is you are a deal-maker, right? You look for opportunities on both sides and bring them together, right?” asked Sreenivasan.

“That’s right,” said Chan.

Chan acknowledged that he managed to establish long-term relationships with Soh, Neo, Hong and other known associates due to the nature of his work. However, Chan denied he was actually involved in helping them trade shares, specifically the BAL shares. Instead, he was merely helping them open trading accounts at banks such as the Royal Bank of Canada and sourcing for trading lines as instructed by Soh.

Despite Chan’s testimony, both prosecution and defence suggested that Chan was more involved in the whole saga than what he had led them to believe. The court was shown messages where Soh asked Chan if there were lines of financing open at Coutts for the accounts held under the names of Neo, Hong and Quah.

“Why is there this urgency to have the line as soon as possible and the need to expedite the line to be ready?” asked deputy public prosecutor Ng Jean Ting in her examination of Chan.

“I have no idea, but because opening an account and getting lines approved takes time … there are procedures. You have to open an account first and then they’ll go and review you and see whether they want to offer you the lines or not. So it’s not even a done deal yet,” said Chan.

Ng then asked Chan why he was even helping to apply for financing with Coutts. Chan replied it was because Soh had asked.

“Why were you prepared to help Mr Soh to do this?” pressed Ng.

“Because he’s a friend,” said Chan.

“Was there any financial arrangement?” asked Ng.

“No, there was none,” said Chan.

The court was then shown messages where Chan was updating Soh that Neo’s account at Coutts was all set and “ready to go”.

When asked why Soh needed to be updated on Neo’s activities, Chan said that was because “everyone takes advice from him”.

Playing the memory game

Chan also told the court how an account under his name at Phillip Securities was actually used by Soh to trade. The account was handled by remisier Henry Tjoa, who was revealed in court as one of the key brokers who was actively helping Soh trade.

The court was also shown several phone messages of Chan reporting to Quah the prices and number of lots transacted in the account under Chan’s name. Questioned by Ng, Chan said he could not recall why he was updating Quah about these trades.

“But if I guess, it’s to relay to Mr Soh,” he added.

“Why are you guessing, Mr Chan? You have told us that the account was opened for Mr Soh’s use,” asked Ng.

“Frankly speaking, I don’t even remember that I was the one putting through the trades for Mr Soh. I don’t remember at all,” said Chan.

“But if we are looking at messages …” asked Ng.

“Since they’ve got the messages, I have to answer that way. I really can’t recall at all. I don’t even know. I don’t remember at all,” said Chan.

“I’m asking you to look at the message now and recall what the account was for, why the account was opened, and to tell us what the message you sent meant. So, I’m asking you, why did you tell Ms Quah about shares that were bought in the account?” asked Ng.

“Usually, when I can’t get hold of Mr Soh, I will contact Quah Su-Ling to relay messages,” said Chan.

“We see here that you said you decided in this case to message Ms Quah. You say you can’t get hold of Mr Soh but ...” said Ng.

“I don’t know. I’m guessing only because ...” said Chan.

“Well, Mr Chan, I don’t understand why you’re guessing. This is your account. This is your message,” said Ng.

At this point, Sreenivasan interjected, “Your Honour, the witness has been asked and answered the question, and it’s a message 10 years ago, your Honour. I don’t think my learned friend should be allowed to badger the witness.”

“One last try, and then we will move on,” said Justice Hoo Sheau Peng.

Acting as go-between

The court was also shown correspondences between Saxo Bank and Chan, related to account holders including Ooi Cheu Kok, Tan Boon Kiat, Peter Chen Hing Woon and Soh Key Chai, and their trading losses.

Earlier in his testimony, Chan denied either knowing these individuals or that he had any direct dealings with them. “Why were you the one meeting Saxo officers about the post-crash arrangements relating to these persons?” asked Ng.

“It’s been a long time, but if I remember correctly, Mr Soh had requested that I assist in these gentlemen or borrowers to negotiate a settlement with Saxo Bank because they all had massive losses in their accounts and were under stress. Basically, he wanted my help to just be the go-between to negotiate a settlement with Saxo Bank,” said Chan.

The court was also shown similar correspondences between Interactive Brokers and Chan.

“As far as you can reason, how would you have become roped in as the representative for the IB accounts?” asked Ng.

“I cannot be sure, but if any, then it’s similar like Saxo Bank, probably I’ve been asked to assist in the negotiations too,” said Chan.

“Asked by who to assist in the negotiations?” asked Ng.

“Mr Soh, I guess. I’m not sure at all. I don’t remember this at all,” said Chan.

Who's the boss

Chan also had to deal with trading losses under his own account — the one he set up for Soh to trade. In the wake of the crash, his account at Phillip Securities, handled by Tjoa, was $1.1 million in the red. A month before the crash in September 2013, the account had a balance of more than $300,000.

Chan claimed he was not aware of the losses until he received a letter of demand from the brokerage’s lawyer.

“The stockbroker never called me. There was no phone call. Nobody ever called me at all. And I just received a legal demand letter in my mailbox,” he said.

“So when Phillip asked you for the money, you should be screaming at the top of your voice, right, ‘I didn’t give these orders’, right?” asked Sreenivasan.

Chan replied he was not screaming as he had presumed it was Soh’s doing. He told the court he “calmly” asked Tjoa why his account was used?

Tjoa replied, “Boss used it.”

Chan added, “I don’t know exactly when after that, I went to ask Mr Soh regarding the losses. He said, ‘Don’t worry, I’ll take care of it.’”

When the Commercial Affairs Department (CAD) started their investigations soon after the crash, Chan admitted to the court he had lied in his first statement to the officers after Soh told Hong and him to “tell the CAD instructions were given by them to Henry Tjoa for discretion trading”. Chan said he told the truth in his second statement.

Chan also told the court Soh gave him $20,000 cash to repay the losses but that was it. “So, I am still paying it up to today,” said Chan.

“I thought you said Mr Soh would make good on the contra loss. Why are you still paying or why are you paying?” asked Ng.

“But he didn’t,” replied Chan.

Was James Hong ‘Dato’?

Both prosecution and defence had accused Chan of downplaying the extent of his involvement in the whole saga. However, the evidence presented in court suggests a closer involvement on the part of Chan than he had let on.

The court was shown a message purportedly between Chan and Hong, the former executive director of Blumont, where Chan described how to deal with payment Phillip Securities was demanding across various accounts.

“Dear Dato, My opinion on Phillips Sec repayment scheme. Henry (Tjoa) had called a couple of times to ask me and the other Singaporeans to meet his management next week. From prior experience, the management will definitely ask for a caveat or second caveat (if mortgaged) from the Singaporean property owner while we make monthly payment and if we default within a month, they will exercise their right immediately.

“Right now there are only three Singapore and the balance Malaysians. Henry said he can probably confirm that if we put 50% collateral in shares (the three Singapore losses are $4 million, so need a $2 million worth of collateral and they will not sell for six months) and we get a 9–12 month payment scheme.

“Once the Singapore accounts are settled, I am sure we can get the Malaysian accounts with better terms as they can’t use the Singapore accounts as hostage for the whole scheme. Once his management knows that they can’t get much legal headway, they have no choice but to agree on the Malaysian accounts.

“This is my strategy now and we don’t want them to start thinking that they want to lump all accounts together. We better do this before it’s too late when they find out their disadvantage if the Singapore accounts are settled,” wrote Chan.

Less than 2 minutes after this, Hong replied Chan, “K.”

Two days later, Hong added, “No response from fren ...”

To which Chan replied, “Well not surprising ...”

DPP Ng, noting that the message started with “Dear Dato”, asked Chan if the message was indeed meant for Hong.

“I really don’t remember this at all,” said Chan.

“Well, was it meant for Mr Hong?” pressed Ng.

“I don’t know. I don’t think so, but I really don’t remember this message at all,” said Chan.

“Is Mr Hong a ‘Dato’?” pressed Ng further.

“No, no, he’s not,” said Chan.

“So when you say ‘Dato’ here, who would you have been referring to?” asked Ng.

“I really can’t remember this one,” said Chan.

“Who are the Singaporeans and who are the Malaysians? How did you know that there were Malaysians with Phillip Securities accounts?” asked Ng.

“I really cannot recall this one. I can’t recall at all,” said Chan, steadfastly denying that message was from him to Soh via Hong. [Text Box: E]

Trades made while account under injunction

In a separate legal case, Chan was ordered in June 2012 by a Singapore court to pay US$5.75 million to a group of Indonesians after deals involving him turned sour. To fund that suit, Soh helped his “blue-eyed boy” financially.

However, upon losing the suit, Chan’s counterparty sought an injunction to freeze all his trading and banking accounts. There was also a court order forbidding Chan to sell his assets including properties. The injunction supposedly also covered Chan’s account at Phillip Securities, from which Soh had allegedly been giving trading instructions.

However, from July 2012 onwards, the account was still being used for trading, thereby resulting in the eventual losses amounting to $1.1 million following the crash more than a year later.

But, there were no records of trading instructions between Soh and Chan during that period. And that was because Soh knew about Chan’s injunction, said Sreenivasan.

“If he has any brain cells, the last thing he will do is to go and trade in an account where there’s an injunction, right? We can say many things about John, but being stupid is not one of them. Agreed?” he asked.

“Agreed,” said Chan.

Throughout his testimony, Chan also could not remember many things. However, he could recall receiving a notice from CDP telling him his account was frozen. “I also believed that the letter was circulated to all the brokerages in Singapore including those that I did not have any relationships with,” said Chan.

Sreenivasan pointed out that despite that letter from CDP, trades continued with Chan’s Phillip Securities account that was supposedly frozen. This would have been an “ace” in Chan’s hand.

“You can go to Phillips and say, ‘Why should I pay $1.1 (million)? You were told my account was frozen, it’s clearly unauthorised, I’ll see you in court’.”

“Yes,” said Chan.

“Unless, of course, you had given Henry Tjoa discretion and, therefore, you can’t turn around and blame Phillip. Right?” said Sreenivasan.

“No,” said Chan.

Chan told the court he eventually met with the management of Phillip Securities over the trading losses. However, he claimed he couldn’t remember the conversation.

Sreenivasan suggested that the reason Chan did not remember was either that he had given Tjoa the discretion to trade shares or that Chan did not want to reveal that Tjoa was trading with his account.

Chan replied, “Or either I have already got the confirmation from Mr Soh that he would take care of my losses.”

“In the end, your losses of $1.1 million, you took care of it yourself, right?” asked Sreenivasan.

“I’m still paying up till today,” said Chan.