Honest mistake. Let's move on.
Trial starts in breach of director’s duties suit against Goh Jin Hian over US$156m in losses
Dr Goh Jin Hian said the suit is a “blatant attempt to scapegoat him”, as he was “not involved in any sham transactions”. PHOTO: BT FILE
Grace Leong
Senior Business Correspondent
Apr 4, 2023
SINGAPORE – A High Court trial began on Monday between the liquidators of insolvent marine-fuel supplier Inter-Pacific Petroleum (IPP) and its former director, Dr Goh Jin Hian,
over US$156 million (S$207 million) in losses resulting from his alleged breach of director’s duties.
In opening statements, lawyers for IPP’s liquidators, who are seeking to recover that sum, accused Dr Goh of “sleepwalking through his time as a director” and failing to discover and stop drawdowns in trade financing between June and July 2019 to fund alleged “non-existent or sham transactions”.
But Dr Goh, 54, the son of former prime minister Goh Chok Tong, said the suit is a “blatant attempt to scapegoat him”, as he was “not involved in any sham transactions”.
According to the liquidators, the trade financing came from Malayan Banking (Maybank) and the Singapore branch of Societe Generale (SocGen), IPP’s two largest creditors. It consisted of US$146 million drawn down for cargo trading operations, and US$10.5 million drawn from SocGen’s facility for IPP’s bunkering operations allegedly when IPP was “balance-sheet insolvent”.
Senior Counsel Lok Vi Ming, who represents Deloitte & Touche, IPP’s judicial managers turned liquidators, questioned why Dr Goh “failed to inquire and investigate a large amount of receivables – US$132 million – allegedly owed to IPP by Mercuria Energy Trading”.
Had Dr Goh done so, he would have learnt that the invoices IPP issued to Mercuria from September 2017 to February/March 2018 were for bogus transactions, and he would have prevented IPP from drawing down on the trade financing with SocGen and Maybank in June and July 2019.
But TSMP Law’s senior counsel Thio Shen Yi and Ms Nanthini Vijayakumar, who represent Dr Goh, said that “when he signed an audit confirmation request that sets out Mercuria’s balance with IPP as at Dec 31, 2017, there was no suggestion from management or the auditors that these amounts were ‘overdue’”.
Mr Thio told the court on Monday: “The liquidators say Dr Goh should be a detective, he should have investigated. What they do not say is that the controllers of the company were the fraudsters.
“They say that he was negligent, or ‘asleep at the wheel’. But Dr Goh, as a non-executive director, was not at the wheel. The perpetrators of the sham were,” he added.
According to Dr Goh’s opening statement, IPP’s cargo trades and its books and records were directly managed out of its Hong Kong office by Ms Zoe Cheung – a former director and 85 per cent shareholder – and former chief financial officer Wallace To.
“If Dr Goh (was suspicious about) IPP’s finances, and was inclined to investigate, he would require Zoe and Wallace’s cooperation,” it said.
“Yet, Zoe and Wallace are likely to be the very people that manipulated IPP’s accounts. Dr Goh would have been fed untruths.”
Furthermore, it is not clear if the banks suffered the US$156 million in alleged losses, or that these losses were solely caused by IPP, it added.
Up to June-July 2019, IPP appeared to be in business-as-usual mode, with no red flags raised. Maybank and SocGen, which financed the supply contracts through letters of credit, were paid on time, as IPP was receiving funds from its customers, court papers said. “There was no reason for Dr Goh to suspect any foul play.”
The liquidators also alleged that Dr Goh missed another opportunity to investigate IPP’s affairs in June 2019 when its bunker operator craft licence was suspended after the Maritime and Port Authority of Singapore (MPA) detected operational irregularities during an inspection.
They said that while Dr Goh had told the MPA that IPP was “under tremendous financial strain”, he did so “without bothering to check IPP’s financial position”.
This is because if he had done so, he would have “discovered that there were receivables amounting to about US$964.9 million as of June 2019”. And if he had checked on the validity and accuracy of these receivables, “the sham transactions would have been exposed”, they argued.
But Mr Thio disputed: “While the suspension was relevant to IPP’s business, it would not cause a director to look backward into IPP’s financials. A director’s actions would be forward-looking (to ensure) that IPP could continue its bunker business with minimal disruption.”
He added: “Have the liquidators properly discharged their duties in bringing this claim against Dr Goh? We will show that they have not done their homework... in service of a bizarre and frivolous claim designed to put reputational pressure on Dr Goh because of who he is.”
As at 2019, Dr Goh was on record as having held directorships in 68 companies. In 2020, he
stepped down as non-independent, non-executive chairman of healthcare and energy firm New Silkroutes Group and resigned as independent director of cord-blood banking firm Cordlife Group.
