Source: The Sunday Times Author: Lorna Tan 10/10/2010
The police and insurance giant AIA are investigating claims by a semi-retired Indonesian businessman that his insurance agent sold him a non-existent insurance policy that cost a whopping US$5 million (S$6.5 million).
The sensational case, which industry experts say is the first of its kind in Singapore, is currently before the courts.
The businessman, Mr Ong Han Ling, 72, is suing the agent, Ms Sally Low Ai Ming, for about $3.6 million plus loss of use of his funds. The $3.6 million is the amount left outstanding after the agent made restitution for some of the policy premiums.
In her defence, 33-year-old Ms Low, who was sacked by AIA in September last year, has alleged that the fake insurance plan - called the 'AIA Thank You Policy' - was part of an elaborate ploy conceived by Mr Ong to defraud AIA. She claimed she was merely an accomplice.
The Sunday Times obtained legal documents filed by both parties and they revealed intriguing claims that included a fake policy schedule and forged letters from AIA officials such as Mr Mark O'Dell, then the insurer's general manager in Singapore.
In his suit, Mr Ong said that the trouble began when he and his wife Enny Ariandini Pramana, 71, bought several policies from Ms Low, from 2000. Over time, Ms Low became a trusted friend to the Ong family and visited their home in Scotts Road regularly, he added.
In 2002, Ms Low told Mr Ong about a policy - called the AIA Thank You Policy - that was offered only to selected clients.
The policy required a single premium payment of about US$5 million - US$3.3 million for a US-dollar component and $3 million for a Singapore-dollar component.
In return, the policyholder would receive annual fixed returns of 6 per cent for the US-dollar component and 7 per cent for the Sing-dollar component, payable upon maturity of the policy in five years. This worked out to maturity sums of US$4.95 million plus $4.5 million.
Mr Ong alleged that it was only when the maturity payouts were due in January 2008 that he found out from AIA that no such policy existed. Ms Low had instead used the premium payment of US$5.06 million to buy four AIA policies under Mr and Mrs Ong's and their daughter's names without their knowledge, he claimed.
To make things worse, Mr Ong had made out his initial US$5 million premium payment to the insurer like any other customer. He alleged that midway through the life of the policy, Ms Low deceived him into giving that money to her.
According to Mr Ong, Ms Low did this by telling him in January 2005 that a computer crash at AIA had resulted in a policy being erroneously placed under his name. Mr Ong was further told that he had to assist in the surrender of that policy, otherwise AIA would lose its licence in Singapore.
What would happen was that AIA would give him a cheque for $6.18 million. Mr Ong would then have to return $5.29 million to AIA and was told he could pocket the remaining $887,998 because this was the profit AIA had made from having the policy under Mr Ong's name.
The catch was that the $5.29 million was not to be returned to AIA but to Ms Low. Mr Ong said he was hesitant to do this, but he claimed Ms Low had produced a letter signed by then-AIA general manager Mark O'Dell, authorising her to collect the money on behalf of the insurer. After reading the letter, he gave the money to her.
In September 2006, he was again informed by Ms Low of another computer crash, but this time the glitch had led to two policies being erroneously placed under his wife's name.
He said that Ms Low again asked for the return of the monies in the same manner, producing an indemnity agreement purportedly signed by Mr O'Dell saying that she was again authorised to collect money on behalf of the insurer. This time he transferred two sums - amounting to US$1 million and to $1 million - to her account.
Agent and client's stories differ
In December 2007, when the original Thank You Policy matured, Mr Ong said Ms Low gave him a letter signed by Mr Edmund Tse, chairman and CEO of AIA, asking if he wanted to reinvest the proceeds in an 'AIA-Thank You 3 Policy', which required a higher single-premium payment of US$8 million.
This time, Mr Ong wrote directly to Mr Tse asking for more time to top up to the higher premium amount. That was when AIA's Singapore office called him in January 2008 and told him that the Thank You policies did not exist.
He also discovered that his initial US$5 million premium payment had been invested in four AIA policies without his knowledge. Three of them, which were represented as erroneous by Ms Low because of the purported computer crashes, were in fact Mr and Mrs Ong's policies which he alleges Ms Low had deceived them into surrendering in 2005 and 2006.
In her defence filed with the court, Ms Low has a completely different version of the events.
She said that in a bid to become a top agent, she did approach Mr Ong to buy more policies in 2002. But she alleged that Mr Ong then cooked up a plan for both of them to defraud AIA and share half the gains from that.
According to Ms Low, the ploy was for her to sell the non-existent Thank You Policy to Mr Ong.
The hope was that when this was exposed, AIA would be held responsible for Ms Low's misdeed and be obliged to compensate Mr Ong for his losses, possibly even honouring the maturity sums promised.
As part of the plan and at Mr Ong's request, she had left a stack of AIA letterheads and the names of different personnel and their positions in AIA with him, she claimed.
She also claimed that it was Mr Ong's idea that she invest the initial US$5.06 million in other policies instead, and that the two computer crashes were engineered by the businessman as he had wanted to realise the profits on the policies.
She said that because Mr Ong did not want his act of obtaining the surrender proceeds to contradict with the plan to defraud AIA, he gave the monies to Ms Low in 2005 and 2006.
She also claimed that by mid-2005, she had regretted taking part in the plan to defraud AIA.
She then asked Mr Ong to give her a free hand in carrying out the investments with the money she received from him until 2007. During that time, she would attempt to achieve returns that would match the amount he wanted to get from the plan to defraud AIA.
However, she was unable to do so because of a market downturn.
Ms Low claimed that Mr Ong agreed to give her a free hand to invest the money partly because she had - at some risk to herself - helped the businessman's son to adopt a child from Indonesia and bring the child to the United States. Mr Ong has denied this.
Ms Low alleged that as she did not fraudulently sell Mr Ong the AIA Thank You policy, she is not liable to pay or reimburse anything to him.
The audacity of the alleged deceit - which involves fake policy documents and forged official documents - has surprised even seasoned industry watchers.
Mr Stanley Jeremiah, president of the Singapore Insurance Institute, said that he has never heard of an agent selling a non-existent product.
'I've heard of agents who pocketed the premiums before disappearing or buying some other policy that the client didn't agree to,' he said.
When contacted, AIA said: 'We are currently conducting an investigation into the matter, including the allegations as outlined in the court papers by our policyholder and the defence raised by our former agent.'
It said it could not provide more details because legal proceedings are under way.
'Protection of our policyholders' interests is paramount to AIA,' it added. 'AIA is committed to upholding the professionalism and conduct of our agency force, and we take any alleged misconduct seriously.'
Mr and Mrs Ong still have six policies with AIA and pay premiums of about $265,000 annually.
When contacted, the police confirmed that a report was lodged but declined to comment further as investigations were ongoing.
*falling off my chair rotflmao!*
:p
