High Court rules that IHC co-founders conspired against firm
Two co-founders and shareholders of Catalist-listed International Healthway Corp (IHC), now known as OUE Lippo Healthcare, had engaged in conspiracy by unlawful means to cause the company injury.
Two co-founders and shareholders of Catalist-listed International Healthway Corp (IHC), now known as OUE Lippo Healthcare, had engaged in conspiracy by unlawful means to cause the company injury, a Singapore High Court found on Friday.
Mr Fan Kow Hin, who was IHC's chief executive from May 2015 to January 2016, together with co-founder Andrew Aathar had in 2015 negotiated a $20 million standby credit facility from funds owned by Crest Capital Asia.
The facility was secured on shares in three of IHC's subsidiaries. Acting on instructions given by Mr Aathar, one of the Crest funds drew down on the facility to purchase IHC shares from the open market. The fund then held the shares on behalf of IHC.
On Sept 9, 2015, the Singapore Exchange (SGX) issued an announcement advising shareholders and potential investors to exercise caution over IHC shares, as its review of the trades in the firm showed over 60 per cent of the total traded volume of its shares in the period since April 2015 to the date of the advisory appeared to be conducted by "a handful of individuals who seem to be connected to each other".
Overall, a total sum of $17.3 million was drawn down from the standby credit facility for the purchase of 59.3 million IHC shares on 14 occasions from April 16, 2015, to Aug 24, 2015, at share prices ranging from 28.5 Singapore cents to 31 cents per share.
After the SGX advisory was issued, the share price of IHC fell from 31 cents to a low of 10 cents by the end of September 2015.
Subsequently, IHC defaulted on the $20 million facility. The Crest funds appointed receivers over the charged shares in three IHC subsidiaries on April 15, 2016, pursuant to the security agreement.
This spooked IHC's bank lenders in Australia, who then appointed receivers to sell three of its properties in Australia. IHC was also forced to deconsolidate these subsidiaries after losing control of them.
IHC later became the subject of a shareholder revolt, and was acquired by hotel group and developer OUE in 2017, after the incumbent board of directors controlled by Mr Fan and Mr Aathar was ousted. This was when the contraventions of the Companies Act came to light.
Now, more than three years later, the court has found that the Crest entities and Mr Aathar "dishonestly assisted Mr Fan's breaches of fiduciary duties to the company".
The court ruled on Friday that Mr Fan and the Crest entities are jointly and severally liable for the sum of $8 million, being additional interest which the Crest funds had charged IHC.
They are also liable for damages over the loss of IHC's Australian business, which will be quantified in separate proceedings.
Mr Fan, together with Ms Lim Beng Choo, who succeeded him as IHC's executive director before shareholders voted her out in January 2017, were also found to have breached their duties owed to the company, OUE Lippo Healthcare announced late on Friday night.
Mr Fan, Ms Lim and the Crest entities are now jointly and severally liable for the sum of $4.5 million which had been paid by IHC and applied by the Crest entities towards the standby credit facility.
THE BUSINESS TIMES
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