Millionaire brazenly hid assets in divorce, saying he had only $12k in bank accounts

A wealthy foreign businessman caught up in a bitter divorce defied repeated Singapore court orders in a shameless – and ultimately futile – attempt to stop his spouse getting her hands on any of his considerable wealth.

His antics – part comical, part absurd – were so outrageous that they prompted the presiding judge to express contempt for his behaviour, noting that it was “seemingly without equal” in Singapore courts.

The man’s scheming included telling the court that he had only $12,000 or so in his bank accounts.

The 39-year-old entrepreneur also claimed that he was self-employed and earning just $7,500 a month but did not produce any documents to back this up, contending that he had not filed a tax return since 2020.

Indeed, he refused to disclose any useful information about his net worth despite being ordered to do so repeatedly by the court.

This was perhaps the most audacious ploy ever used here to keep a former spouse from getting any money, but it was his 38-year-old former wife who had the last laugh after she produced business registration data to show that the man had, at the very least, a $10 million stake in an overseas business.

As the man had made only bare denials without any proof, the entire $10 million was up for division, which resulted in the wife being given about $7 million.

High Court Judge Mohamed Faizal noted that this case involved one of the most brazen attempts to shield assets in divorce proceedings the Singapore courts have seen.

He found that the husband had hidden almost the entirety of his assets over the years in order to do his best to “shoehorn the court from being able to sensibly dispense justice”. 

In doing so, the man produced a myriad of excuses to claim there was no evidence showing the value of his assets, so he should be allowed to declare these to be worthless.

“The response by the court must reflect the utter contempt that it has for such behaviour,” the judge said, in awarding the wife an estimated 69 per cent of the known matrimonial assets.

“Such a response, in my judgment, is appropriate and necessary if we are to live up to the mantra that the need for spouses to be honest with each other in marriage extends to being honest and forthright to the court in a divorce,” he added.

Here are three takeaways from this case that show why it is difficult to pull the wool over a judge’s eyes.

Valuation of a business

A corporate filing showed the wife that her former husband appeared to have an 80 per cent stake in a foreign company with a paid-up capital of about $12 million, making his share worth about $10 million.

The amount of paid-up capital is seldom used to value a company because the figure merely reflects the initial equity investment. Not surprisingly, the husband objected, saying that the $12 million was not a fair reflection of the firm’s current market value and that he had bought the shares at a different price.

But, given that the husband had intentionally not furnished any evidence to support his claim, the court accepted the wife’s valuation as “the only meaningful proxy available”.

Judge Faizal said that even if this amount was overly high, the husband had only himself to blame, noting: “In a room full of shadows, the one who casts a light must necessarily lead the way.”

In stark contrast, the husband claimed that the business, which operated in a few countries, was worth nothing, but again he did not disclose any supporting documents, even though he could easily do so as the biggest shareholder.

As the husband was clearly hiding vital information, the judge said the man should rightfully take the risk of overvaluation.

In adding $10 million to the sharing pool, Judge Faizal said there was a possibility that even this amount could be an understatement of the actual value of the whole business.

Inconsistent conduct

If a company is not making any money and is practically worthless, it should be easy for an accountant to produce documents showing this.

Yet when called to produce paperwork proving that his companies were worthless, the husband said his accountants would require six months to supply the accounting records.

Not surprisingly, the court agreed with the wife’s point that these companies were likely “big, complex, high-revenue yielding operations which were extremely valuable”, since so much time was needed to just compile a summary of their accounts.

The husband also claimed that he was not a director or shareholder of these companies. But such assertions flew in the face of the work history he wrote in his own LinkedIn profile and other documentary evidence such as company letters.

Judge Faizal noted that the husband painted himself effectively as a man of very modest means, but added: “It should be painfully obvious that a man of very modest means does not run a multi-jurisdictional corporation in which he is able to contribute to the equity of the company to the tune of millions of dollars.

“Nor does such a person hire lawyers to set up elaborate trust accounts which require annual accounts and in which he is the singular beneficiary, only to elect to put nothing in these accounts.”

Family trust account  

The husband had a complex trust account set up but claimed that there had been no income or expenditure related to it since its inception.

Aside from the fact that he did not even bother to get an accountant to verify this, there was also no mention made of the assets or value of this trust.

The wife said the sole purpose of the trust account was to illegally “ring-fence” matrimonial properties from the court’s view.

Unlike an investment account that would have a steady stream of cash transactions, such a trust account could be dormant for years. For instance, the owner may have $1 million in this account but does nothing with the money.

If this account was earning a low rate of interest, it is likely that only a few hundred dollars would be deposited annually. So a declaration that the income is small would not reflect the reality that there was $1 million stashed in it.

Judge Faizal rejected the husband’s claim that his trust account had “no assets of significant value in it” because it defied “common sense and logic” that the man would go through a complicated process of documenting it with a comprehensive trust deed that had over 30 pages, only to leave it dormant.

As the man continued to “surreptitiously keep the likely sizeable pool of assets into that account shielded fully from public view”, the judge ruled that the wife should get a further 10 per cent of the total asset share due to such “blatant and egregious non-disclosure which was seemingly without equal” in Singapore courts.

Judge Faizal said: “It is clear that such an uplift is needed: It is self-evident to me that the assets being hidden from the view of the courts are in the range of millions, and I see no reason why the courts should shy away from taking the steps necessary to effect broad justice between the parties by ensuring that the wife is not unduly prejudiced by such non-declaration.”

Without the inclusion of the $10 million overseas assets, only about $150,000 would be up for sharing. As the wife was awarded 69 per cent of the assets, the court ordered the husband to pay about $7 million.

So the lesson here is that the law always has a way to make those who hide their money from any legitimate claim cough out their due share.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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