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Goh Jin Hian sued for alleged breach of director's duties

Goh Jin Hian sued for alleged breach of director's duties

Source: Straits Times
Article Date: 06 Oct 2020
Author: Grace Leong

Judicial managers of insolvent Inter-Pacific Petroleum seek to recover over $212m: Court papers

The judicial managers (JMs)of insolvent marine fuels supplier Inter-Pacific Petroleum (IPP) have sued the company's former director Goh Jin Hian over US$156 million (S$212.6 million) in losses it sustained due to his alleged breach of director's duties, according to court documents seen by The Straits Times.

The suit against Dr Goh - the son of former prime minister Goh Chok Tong - was filed late last Friday night in Singapore's High Court by LVM Law Chambers, which represents Deloitte & Touche, IPP's JMs.

It is being funded by IPP's two largest creditors, Malayan Banking and Societe Generale's Singapore branch.

The suit seeks to recover about US$156 million with interest from Dr Goh for drawdowns of trade financing between June and July last year to fund what the banks alleged were "non-existent or sham transactions".

This consisted of US$146 million allegedly drawn down for carrying out cargo trading operations and US$10.5 million drawn from SocGen's facility for IPP's bunkering operations, the suit said.

Dr Goh told ST yesterday that he was "surprised that the judicial managers have commenced an action so unilaterally" without engaging him on the full side of his story.

"I have raised various queries and concerns to the JMs. How the banks could have let the debt build up to US$160 million when this was meant to be back-to-back financing or very short-term loans? Have the JMs challenged the bank's entitlement to this payment? What did the banks who are experts in trade financing miss that I should have picked up? What should I have done as a director that I did not do?"

IPP and parent company Inter-Pacific Group filed for a court-led debt-restructuring process in August last year. They cited "a significant cash-flow crunch" following the suspension of IPP's bunker craft operator licence last year after the Maritime and Port Authority of Singapore detected operational irregularities during an inspection.

The licence was cancelled in October last year and its bunker supplier licence terminated shortly after in December.

Dr Goh, 52, was a director at IPP from June 28, 2011, to Aug 20 last year.

The suit accuses him of breaching his duty to act with due care, skill and diligence to ensure IPP's affairs were "properly administered and that its assets and property are not dissipated", among other things.

It claims that had he done so, he would have "discovered from the last quarter of 2017 that there were significant outstanding accounting receivables purportedly due and owing from its customers, which were derived from transactions which were in fact shams and non-existent".

IPP would buy oil from suppliers under supply contracts and then on-sell to its customers under sales contracts. IPP would submit the sales and supply contracts to SocGen or Maybank in order to get trade financing.

Deloitte said that IPP's books and other documents show that there were outstanding receivables of US$869 million purportedly due to IPP as at September last year by its fuel oil customers. About US$762.4 million of this was incurred by Mercuria Energy Trading.

But when the JMs sought payment, they found that many of these sales contracts were a sham and non-existent. In fact, IPP was balance-sheet insolvent by around June last year, the suit said.

It alleges that Dr Goh "ought to have investigated why there was such a high level... of outstanding receivables due from Mercuria, every month starting from end-September 2017... and why the receivables... with a credit term of only 60 days, remained uncollected as at June and July 2019".

Had he done so, he would have discovered that the purported receivables arose from mostly sham transactions, the suit said.

Further, in failing to prevent IPP from applying to SocGen and Maybank for drawdowns, at the time when IPP was insolvent, Dr Goh allegedly "acted in breach of his fiduciary duty to (IPP) to take into account the interests of (its) creditors to ensure that IPP's assets are not dissipated or exploited to the prejudice of the creditors' interests", it said.

The suit accuses Dr Goh Jin Hian - an Inter-Pacific Petroleum (IPP) director from June 28, 2011, to Aug 20 last year - of breaching his duty to act with due care, skill and diligence to ensure IPP's affairs were "properly administered and that its assets and property are not dissipated", among other things.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.


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