MAS seeks court order to freeze former China Sky CEO’s funds
High Court’s interim order prohibits him from sending any
money out of Singapore
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High Court’s interim order prohibits him from sending any money out of Singapore
By LYNETTE KHOO
10 April 2012
The Monetary Authority of Singapore (MAS) is seeking a court order to freeze funds in Singapore belonging to the former chief executive officer of China Sky Chemical Fibre Co as a police probe on China Sky and its directors is underway.
The High Court has granted MAS an interim court order prohibiting Huang Zhong Xuan from transferring any money from his Credit Suisse account here or sending money out of Singapore from that account pending the hearing of the court application.
A closed-door hearing is scheduled to take place tomorrow.
China Sky and its directors, including its former directors, are under probe by the Commercial Affairs Department (CAD) on possible offences under the Securities and Futures Act (SFA).
If the offences are established, ‘it is imperative that assets should be available to satisfy such liabilities’, Lee King See, deputy director of enforcement at MAS, said in court papers filed on March 28.
‘There is grave risk that the monies in the bank account are being dissipated by the 1st defendant (Mr Huang),’ Mr Lee added.
According to the court papers, Mr Huang had transferred about US$10 million out of the bank account on March 5 and on March 27 gave instructions to Credit Suisse to move the remaining US$3.7 million out of the bank account.
MAS has named a British Virgin company, Build Up International Investments Ltd, as the second defendant as this wholly owned company of Mr Huang is the bank account holder. An MAS spokesman said yesterday that MAS is unable to comment as the case will be heard in court.
Edna Lam, a Credit Suisse spokeswoman in Singapore, also declined to comment.
But the affidavit filed by MAS has shed some light on the CAD probe on China Sky and its directors.
The probe began on or around Feb 16 ‘as a result of a number of irregularities uncovered by SGX in the course of reviewing the annual reports filed by China Sky for financial years 2006 to 2010, including announcements made by China Sky in response to queries from SGX’.
These disclosures pertain to interested party transactions (IPTs) between China Sky and its then-audit committee chairman Lai Seng Kwoon and an aborted land acquisition in Fujian province. China Sky allegedly provided conflicting information on the price of the land acquisition, the identity of the party who holds the land title and the identity of the recipient of its payment deposit, among other things.
It also did not promptly disclose information on the IPTs and material information on the Fujian land as required under listing rules, according to the court papers.
CAD is examining possible offences, including making false and misleading statements under Section 199 as well as failing to disclose material information under Section 203 of the SFA. Such offences could be punished by a fine of up to $250,000 or jail term of up to seven years or both.
China Sky has disputed that it breached any listing rules or securities law, MAS said in its court papers.
‘It is likely that further investigations may yield more evidence of additional breaches or offences by China Sky,’ Mr Lee of MAS said in the affidavit.
China Sky had 2,835 shareholders as at Dec 9, according to the affidavit.
Mr Huang, who resigned from China Sky on Feb 7, is also being sued by a unit of Malaysia’s Hong Leong Bank Bhd for failing to pay $7.4 million on a share margin facility. He had pledged part of his 37.85 stake in China Sky to the bank.
Trading of shares in China Sky has been suspended since Nov 17, a day after the Singapore Exchange first ordered the company to appoint a special auditor to look into certain transactions.