Tan Kin Lian's Own Minibond Saga - A Timeshare Scheme Called Club Nuansa

[Bryan T]

ST :

"Not surprisingly, critics have emerged online in the run-up to the presidential election, questioning his departure from NTUC and his role in investments which saw investors lose money.

One of these was the 40 per cent stake NTUC Income took in an overseas resort chain called Club Nuansa in June 1997.

The resort was pitched to policyholders as a benefit, with a week's free use of resort facilities each year over a 30-year membership period. NTUC Income policyholders paid a $16,000 discounted membership fee, and would be returned the entrance fee after the 30 years.

It was a joint venture with Alliance Technology and Development (ATD), an eye-care products supplier that was diversifying into theme parks and resorts, but was already showing signs of financial difficulty at the time.

Its most prominent venture was the Fort Canning Country Club, whose former president was the late Dr Ong Chit Chung, a former politician.

At the time of its launch, Club Nuansa promised to pump in an initial $50 million and eventually up to $500 million to expand the resort chain to 30 destinations, including Australia.

A highlight was a $22 million kampung-style chalet resort on Pulau Ubin called Ubin Lagoon Resort.

But ATD sank further and further into debt, dragging Club Nuansa along with it. It is believed about 400 members had signed up by the time Club Nuansa's financial difficulties began to make headlines.

In June 2000, its members discussed at a meeting the possibility of the club either being wound up or being taken over by NTUC Income, according to ex-club member G.L. Ong, a freelance marketer.

In March 2002, ATD finally collapsed under a $115 million debt mountain, and was placed under judicial management.

Three years later, the club ceased operations and was placed into liquidation.

This angered some members like Ms Ong, who got back only a quarter of the fees paid.

'There must be accountability,' she said. 'Timeshares then had a bad name, but I had gone into the club based on the trust I had in NTUC Income and Tan Kin Lian, and there was also a guaranteed payback.'

When asked about this, Mr Tan said his then marketing manager believed it was a good idea, but the investment 'turned out to be bad in other ways'.

'Some of these things are just bad luck.'"

 

[Bryan T]

In the first part of the ST story....

"Presidential hopeful and former NTUC Income chief Tan Kin Lian has revealed that he was asked to leave the insurance cooperative in 2006.

In an interview with The Sunday Times, he disclosed the reasons for his sudden departure from the company he helmed for nearly 30 years.

'When I ran NTUC, I ran it quite differently from what my board wanted. The board wanted NTUC to be more commercial. I wanted NTUC to be more cooperative. So I struggled with my board over the years,' said Mr Tan."


Then, after the Club Nuansa story came out:

"When asked about this, Mr Tan said his then marketing manager believed (Club Nuansa) was a good idea, but the investment 'turned out to be bad in other ways'.

'Some of these things are just bad luck.'

He also said investments above a certain size were made with the approval of the board."

...that's Classic TKL!

 

[Bryan T]

Disclaimer: If TKL or Income disagree with the facts as presented below, they can contact me and I will make amendments where I see fit or am convinced.

Allow me to supplement the information provided by ST about Club Nuansa, a times-share scheme partly owned and marketed by NTUC Income to its policy-holders during the period that Tan Kin Lian was CEO.

As report, Club Nuansa was a joint venture between Alliance Technology and Development (ATD) and NTUC Income, of which the latter held a minority stake of 40%.

Around 1997, NTUC Income and ATD made representations in The Business Times that they were building a cluster of 20 resorts and would initially invest $50m in four properties. In a ST article then, ATD also claimed that it expected to invest as much as $500m to expand its resort chain to 20 or 30 destinations in the following 5 to 10 years.

The Club Nuansa scheme called for an entrance fee of $16k. Members get to use the club-owned resorts for a week per year over a period of 30 years. They also had to pay a maintenance fee of $600 annually.

An important attraction promoted was a unique “Payback Scheme”. Under the “guaranteed repayment” scheme, members were promised that their entrance fee would be refunded at the end of the 30-year period.

To encourage the take-up of Club Nuansa membership, Income marketed it as a special benefit for its policy-holders. It also offered discounts on the membership fee and an instalment plan.

Apparently about 400 members joined the scheme, since policy-holders placed their trust in Income, and especially since it was a cooperative under NTUC. Overally, membership fee of at least $6m should have been collected.

Then came the shockers.

Signs of trouble started appearing in 1998 when membership subscriptions did not reach expected proportions, probably due to the ensuing Asian Financial Crisis. The “Payback Scheme” was quietly dropped from newer members who subscribed.

The existing members knew that without this payback-scheme, it would be difficult to attract new members. And without new members, the fate of the club would be sealed. A timeshare scheme only works if there were more willing to share.

The fateful day came in June 2000, when the winding up of Club Nuansa was proposed. An option for Income to take over the club was considered, but subsequently not taken up.

Then in March 2005, members were informed of the club’s decision to cease operations and the appointment of a liquidator to wind it up. It was then that the deplorable state of the club’s finances was revealed to members during the Creditors’ Meeting.

Members also realised that Club Nuansa was registered in the British Virgin Island!

I will not attempt to expound on the legal and taxation advantages of registering Club Nuansa as a so-called off-shore company in BVI. But suffice to say, it made it very difficult and expensive for club members to pursue legal recourse when troubles brewed.

Lai Meng, who was Income’s Head, Business Enterprise, was a Director of Club Nuansa. Lai Meng is the same person who also ran TKL’s other luckless pet project – Car Coop, a car-sharing scheme. He is probably the one who managed TKL's other non-core project which I wrote about in my earlier note:"Of Puzzle Books, Snow, and Car/Bicycle Sharing.....".

Out of the entrance fee of $16k, the liquidation payout to members was $3000.

To keep this note short, I will add my commentary to this saga in a separate note. Stay tuned