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SocGen, Maybank cleared to fund potential suit against IPP ex-director

SocGen, Maybank cleared to fund potential suit against IPP ex-director

Source: Business Times
Article Date: 02 Oct 2020
Author: Tay Peck Gek

Insolvency professionals from Deloitte & Touche have alleged that Dr Goh breached his duties as a director.

Singapore's High Court has approved two major bank creditors' bid to fund Inter-Pacific Petroleum's (IPP) lawsuit against former director Goh Jin Hian.

Societe Generale and Maybank are seeking to recover at least US$156 million in losses they claim were a result of Dr Goh's alleged negligence, according to court documents.

The funding arrangement between the banks, IPP and the latter's judicial managers (JMs) was given the nod by the High Court last month. The court generally looks at whether the creditors would be prejudiced by such a litigation funding arrangement, and not the merits of any lawsuit to be filed.

The insolvent marine fuel and cargo trader will now have financial assistance from two of its largest creditors to file legal claims against Dr Goh. Litigation costs were estimated to be in the region of S$1 million inclusive of any appeals.

The agreement was inked days before the JMs sent a letter to the 51-year-old medically-trained son of former prime minister Goh Chok Tong, demanding he make restitution for IPP's US$156.5 million in debts due to the Singapore branches of Societe Generale and Maybank for what they claimed were drawdowns of trade facilities in June and July last year for "sham" transactions.

The police have confirmed in response to queries by The Business Times that a report had been lodged with regards to this case and investigations are ongoing, but did not identify the complainant or subjects of the probe.

Insolvency professionals from Deloitte & Touche have alleged that Dr Goh breached his duties as a director. He was executive director at IPP from 2011 to late 2014, and then non-executive director till August 2019.

The JMs have not yet filed suit against Dr Goh. According to the JMs, Dr Goh signed off on the financial statements of IPP for 2017 and certified that the audited financial statements gave a true and fair view of the company's financial position. The JMs' checks found that some invoices issued for transactions between 2017 and last year were non-existent.

Had Dr Goh discharged his duties with care and diligence, the JMs allege, the fictitious transactions would have been uncovered and the funds would not have been drawn down from the banks.

Dr Goh owns 15 per cent of Inter-Pacific Group, IPP's parent. He has denied the allegations in correspondence between his lawyers, TSMP Law, and the lawyers of the JMs. He claimed that he was not involved in the daily management of IPP given his non-executive position at the time.

He was then chief executive of mainboard-listed New SilkRoutes Group - a position he vacated with effect from Oct 1.

Dr Goh also said it is not the role of a director to verify the authenticity of documents from management unless there are obvious red flags.

He questioned the robustness of the banks' due diligence and credit risk assessment, given that these lenders would have to ensure the documents were in order before permitting the drawdowns.

Dr Goh told BT through TSMP Law: "The JMs' allegations against me are without merit on the facts, and on the law... I have every confidence that I will be wholly vindicated if the need arises to defend myself in court."

Societe Generale has separately sued IPP as well as majority shareholder and executive director Cheung Lai Na, alongside several other defendants, in Hong Kong last year. Ms Cheung resides in that city.

The bank alleged that it was defrauded into furnishing the loan facilities as a result of a conspiracy by the defendants.

The Hong Kong court noted that there is a "good arguable case that the bank has become the subject of a fraud" through the raising of trade finance against "fictitious" transactions, when it granted injunctions sought by the bank against the defendants to freeze their assets.

Dr Goh is not a defendant in that suit.

IPP was placed under judicial management in Singapore in September last year upon Ms Cheung's application, following the suspension by the authorities of its bunker craft operator licence in June last year. She claimed the incident had dented counterparties' confidence in IPP, resulting in its cargo business being affected when the counterparties insisted on cash terms for supplies, court documents showed.

IPP lost that licence as well as its bunker supplier licence last October and December respectively.

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

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