Former top China Sky execs no-show at trial

The former chief executive officer and the financial controller of China Sky Chemical Fibre were a no-show yesterday at a trial involving the Monetary Authority of Singapore’s (MAS) efforts to permanently freeze US$3.7 million of the ex-CEO’s funds ahead of the completion of a probe of China Sky for possible breaches of securities law.

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Guanyu 道 said…
Former top China Sky execs no-show at trial

Grace Leong
10 July 2013

The former chief executive officer and the financial controller of China Sky Chemical Fibre were a no-show yesterday at a trial involving the Monetary Authority of Singapore’s (MAS) efforts to permanently freeze US$3.7 million of the ex-CEO’s funds ahead of the completion of a probe of China Sky for possible breaches of securities law.

In question is ownership of the funds now frozen in a Credit Suisse AG account in Singapore by an interim court order that had been sought and obtained by MAS after US$10 million was allegedly transferred out on March 5, 2012, by China Sky CEO Huang Zhong Xuan.

The High Court yesterday ordered the affidavits of Mr Huang and Sunny Hui San Wing not to be used as evidence in the trial after both men failed to appear as witnesses for cross-examination.

Justice Belinda Ang also denied an application by Mr Huang’s lawyer, Philip Fong of Harry Elias Partnership, to cross-examine Lillian Liao, a Credit Suisse relationship manager who had handled the account and also MAS’ key witness.

This came after MAS, which is represented by Senior Counsel Cavinder Bull of Drew & Napier LLC, argued that Mr Huang, in failing to appear, breached a court order, granting MAS liberty to cross-examine the defendants’ witnesses.

When asked by Justice Ang to explain Mr Huang’s and Mr Hui’s no-show, Mr Fong said that it is Mr Huang’s position that the assets in the Credit Suisse account (comprising shares in Trony Solar Holdings Co, dividends and share sales proceeds) don’t belong to him, but are instead held by Build Up International Investments, a company registered in the British Virgin Islands.

According to Mr Huang, Lau Kam Sze, a shareholder of Build Up, provided “cogent evidence” that the money used to buy Trony Solar shares belonged to him. As such, when the shares were sold, the proceeds should also belong to Mr Lau.

Furthermore, Mr Huang had undergone a medical examination recently and was advised not to travel. As for Mr Hui’s no-show, Mr Fong said Mr Hui is “not a party to the proceedings and at this point in time, has important matters to attend to”.

Calling these reasons “woefully inadequate” - in particular that of Mr Hui as “epitomy of contempt” - Mr Bull countered that Mr Hui is an important witness.

“He is the point of contact for Lillian Liao and played an intermediary role in communications with the bank. So he is not an insignificant witness.”

It is MAS’ position that Mr Huang is the beneficial owner of the account because Ms Liao took instructions almost exclusively from him or Mr Hui on how the account was to be operated.

But Goh Phai Cheng, SC, who represents Build Up, disagreed. “Our case is that Lillian is lying,” he said. “There is evidence from a forensic handwriting expert that the signatures of Mr Lau and Yiling (Mr Huang’s daughter) on the ‘Declaration of Beneficial Ownership’ are forgeries.”

He added that Ms Huang and Mr Lau are the beneficial owners of Build Up.

According to court papers filed by MAS, the declaration letter states that only two shareholders of the company, Ms Huang and Mr Lau, hold the shares as Mr Huang’s nominees.

But Mr Goh countered that the declaration letter was not signed by Ms Huang or Mr Lau; and that the account application form did not contain a declaration made by Build Up that Mr Huang is beneficial owner of the bank account or the company.

China Sky and its directors have been investigated by the Commercial Affairs Department since February 2012 following a number of irregularities uncovered by Singapore Exchange in the course of reviewing the annual reports filed by China Sky for financial years 2006 to 2010. These disclosures pertain to interested party transactions between China Sky and its then-audit committee chairman Lai Seng Kwoon and an aborted land acquisition in Fujian province.
Guanyu 道 said…
Shortly after that, Mr Huang abruptly resigned as China Sky’s CEO and instructed Credit Suisse to start selling large quantities of Trony Solar shares.

To ensure that assets are available to pay any fines imposed by the court and to satisfy any liabilities for possible breaches of the Securities and Futures Act, MAS is seeking a final order preventing Mr Huang from further dissipating assets from the account.

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