$2m stake in doctor's firm recorded on paper as $3
Lawyer for investor suing aesthetics doctor Georgia Lee calls the arrangement a 'sham'.
A $2 million investment in the skincare business of a well-known aesthetics doctor was recorded on paper as $3 and routed through a conduit before it was paid personally to Dr Georgia Lee, the High Court heard yesterday.
The lawyer representing the investor, who has brought a suit to get back the $2 million, called the arrangement a "sham" that would have allowed Dr Lee to plausibly deny his client's investment.
Dr Lee agreed there was no direct evidence of any payment of funds made by movie and TV producer Anita Hatta, but added: "In my mind, she did pay $2 million for 5 per cent (stake)."
Dr Lee was being cross-examined on the fourth day of the hearing into Ms Hatta's lawsuit for fraudulent misrepresentation and minority oppression.
In 2012, Ms Hatta agreed to invest $2 million in Dr Lee's skincare brand DrGL. She received a 5 per cent stake in three companies - DRGL, DRGL Spa and CIEL - that Dr Lee set up to package, market and sell the products.
Ms Hatta claims Dr Lee misled her into parting with her money by painting an exaggerated picture of success. She also alleges that Dr Lee had misused company funds.
Yesterday, Ms Hatta's lawyer Wendell Wong asked Dr Lee if $2 million was a fair price for 5 per cent of the shares, considering that her companies were bleeding at the time.
He noted that Dr Lee had earlier given a friend, Indonesian-Chinese businessman Frank Cintamani, a 50 per cent stake in DRGL Spa for free.
Dr Lee replied: "You can't put a value on a start-up."
The court heard that Dr Lee signed two forms to transfer 5 per cent of her shares respectively in DRGL and CIEL to Ms Hatta, while Mr Cintamani signed a form to transfer 5 per cent of his stake in DRGL Spa to Ms Hatta. The value of the payment for the shares was stated as $1 in each form.
Questioned about this, Dr Lee said the value was indicated by her accountant and she did not understand the implication.
Mr Wong also asked why Mr Cintamani's shares were being transferred to Ms Hatta, when his client was supposed to be buying Dr Lee's shares. Dr Lee said she still treated his shares as hers.
The court also heard that Ms Hatta's cheque for $2 million was paid to the account of Mr Cintamani's events company Fide Productions. This was done under an agreement in which Fide would have exclusive rights to produce events for the DrGL brand.
Mr Cintamani then issued a cheque to Dr Lee from his personal account. She said she re-channelled the funds to the three companies as loans.
Dr Lee said she did not understand the implication of the payment structure, which she thought was a result of discussions between Ms Hatta and Mr Cintamani, who was her business adviser.
When Mr Wong questioned her on the reason for such a complex structure, Dr Lee said that in her mind, it was simply a mechanism for Ms Hatta to buy the shares.
Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.