Hunting for the truth
Fingers were pointed at Soh Chee Wen when Asiasons, Blumont and LionGold soared last year before collapsing on Oct 4. As the anniversary of the crash approaches, CAD and MAS might be getting closer to discovering what happened.
Note: Some events in this article has been proven to be false. The Edge has acknowledged some of the false information. Blumont Group had commenced legal proceedings against The Edge for libel.
Note: Some events in this article has been proven to be false. The Edge has acknowledged some of the false information. Blumont Group had commenced legal proceedings against The Edge for libel.
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Fingers were pointed at Soh Chee Wen when Asiasons, Blumont and LionGold soared last year before collapsing on Oct 4. As the anniversary of the crash approaches, CAD and MAS might be getting closer to discovering what happened.
By The Edge Singapore
02 September 2014
Around this time last year, anyone holding shares in Asiasons Capital, Blumont Group or LionGold Corp would probably have been feeling pretty excited. All three stocks had climbed steadily over several quarters and were starting to head into a steep rally that would see them gain as much as almost 200% in the following few weeks.
The rest, as they say, is history. The spectacular crash on Oct 4 wiped billions of dollars off the market value of the three companies, leaving some brokerage firms, dealers and investors with searing losses. A firestorm of questions followed about who was to blame and whether Singapore’s regulators had been caught sleeping on the job. Yet, almost a year on, the market is none the wiser about what accounted for the meteoric rise of the shares and their subsequent fall.
Now, with the anniversary of the crash approaching, The Edge Singapore has learnt that almost 70 people have been hauled in for questioning under a joint probe started in April by the Commercial Affairs Department (CAD) and the Monetary Authority of Singapore (MAS). Those summoned include a few board members of the three companies and traders from several braking houses. Many of them have had their passports impounded.
More interestingly, sources tell The Edge Singapore that Malaysian businessman Soh Chee Wen, whose name has been linked to the three companies and to several others listed in Singapore and Malaysia that rocketed and crashed spectacularly over the last two decades, appears to have been identified by the authorities as the ringleader in the whole affair.
“He has been called up many times for questioning by CAD,” says a former associate of Soh’s. According to sources, Soh - who often goes by the name John Soh - is among those whose passports have been seized. He is also said to be out on police bail.
It is unclear at this stage, however, exactly how the authorities are building a case against him, or what charges could be brought. Soh’s name is not found in any of the filings of the three companies or even on their shareholder rosters.
His only direct links to them, according to those in the know, is that his employment pass in Singapore is sponsored by Blumont, and that he carries business cards that identify him as “adviser” to LionGold’s chairman, Nik Ibrahim Kamil. “The chairman is a close friend of John’s,” says a person acquainted with both men.
In fact, some sources say Soh might not even have been on the radar of the authorities until April 2, when CAD officers were collecting evidence at LionGold’s office on Mohamed Sultan Road. “The CAD officers went into a room in the office and found one of the drawers locked and ordered it to be opened. They saw this name card - ‘John Soh, adviser to chairman’ - and asked who this person was. They didn’t even know John Soh and Soh Chee Wen are the same person,” says a source.
Before the October crash, Soh spent much of his time in Singapore at LionGold’s office doing what he supposedly does best - deal making. Those deals typically involved listed companies, including Asiasons, Blumont and LionGold.
“He has been using all these companies to do acquisitions. He wanted the share prices to be inflated,” the source says. “He is a person who creates news to build up the share price so that the company can buy this and that asset.”
According to another source, Soh brought together various remisiers, brokers and private bankers about a week or so before October “to talk up the shares of the three companies”. That could have contributed to the sudden spike in the three counters just before the crash.
LionGold is currently cooperating with the ongoing investigation. The company was ordered on April 2 to provide CAD with access to all documents and electronic data related to LionGold board member Ng Su Ling and business development director Peter Chen.
On April 29, LionGold was further ordered to provide financial records, board minutes dating back to 2010, as well as information related to a corporate transaction that was called off because its shares had collapsed. CAD also wanted access to corporate emails of LionGold’s board members and the adviser to the chairman.
Even as the police investigation continues, the Attorney-General’s Chambers is assisting MAS in building a case against those behind the three stocks’ trading irregularities, according to a person with knowledge of the matter. A group of prosecution and expert witnesses is being assembled, he says. “We know who the CAD wants.” The Attorney-General’s Chambers and CAD did not reply to The Edge Singapore’s queries by press time.
Loss of control
Soh is still seen regularly at LionGold’s office these days, and remains in contact with his traders, bankers and business partners. Whether they, particularly those questioned by CAD, are standing by him amid the ongoing investigation is unclear, though. The sheer speed of the meltdown last October and the scale of the losses suffered by some of Soh’s brokers could well leave them doubting his ability or willingness to eventually bail them out.
A person close to Soh says the former tycoon confided that one big mistake he made was that he “empowered [his] brokers to create too much hype” about the three stocks and that he “lost control of them”.
Notably, Soh failed to rein in two individuals, one of whom is Dick Gwee Yow Pin, who has also been questioned by CAD. Gwee, a former chairman of IPCO International, which Soh is affiliated with, was convicted in 2002 of manipulating the shares of Mid-Continent Equipment Group, an oil industry equipment supplier.
Mid-Continent made its trading debut on Singapore’s then-Sesdaq board on July 22, 1998, only to be delisted three months later after the market regulator found the stock was cornered. The shares had soared to a high of 87.5 cents from their IPO price of 15 cents just a week after the listing. IPCO was a joint owner of Mid-Continent before the latter launched its IPO.
“Dick is the one who is always monitoring the share prices on his behalf and liaising with all the brokers,” says the person close to Soh. Gwee and Soh have reportedly known each other since the 1980s. IPCO itself was also ordered by CAD in April this year to provide information for its investigation.
Of the dozens of people suspected by CAD of having had a role in the rise and fall of Asiasons, Blumont and LionGold, Soh will attempt to “save” only a couple of them, according to this person. One of them is likely to be Neo Kim Hock, who resigned as Blumont’s executive chairman in May this year, having held the position since November 2003. The other individual is believed to be Quah Su Ling, IPCO’s CEO. Like Soh, Quah has been questioned by CAD and has surrendered her passport. She sued Goldman Sachs last November, alleging that the bank wrongfully force-sold shares that she pledged as collateral for a loan. The shares included those of Asiasons and Blumont. The Edge Singapore reported on Nov 25 that Goldman began the forced selling just before Oct 4, a move that could have contributed to the crash. Quah ended her marriage of 26 years earlier this year and is said to be living with Soh.
The assets of Neo and Quah have been frozen by court orders in Singapore and Malaysia that Interactive Brokers obtained last year after the crash. The US-listed online discount broker has been seeking to recoup millions of dollars in losses arising from its exposure to four stocks -Asiasons, Blumont, LionGold and Innopac Holdings. It had sought similar injunctions to freeze the assets of several other individuals, all Malaysians, who also suffered big losses from their investment in these companies.
Financial straits
It is unclear what Soh can do to help Neo and Quah, as he himself is believed to be financially strapped. Just about all the stocks linked to him are now trading at a fraction of their value a year ago, and efforts to revive interest in them have fallen flat.
Asiasons, Blumont and LionGold are not the only companies Soh is associated with. He is said to also own shares, through his nominees, in more than a handful of other companies, including Magnus Energy, Annica Holdings, ISR Capital, ITE Electric and Swee Hong. Some of these firms are linked to Asiasons, Blumont and LionGold through crossholdings and common directors.
Tellingly, a number of executives and board directors of these companies have been summoned by CAD for questioning and had their passports seized too. Among them is Annica Holdings chairman Edwin Sugiarto, who is out on police bail. Others include Magnus Energy’s Luke Ho and Koh Teng Kiat; Ho is the company’s chief financial officer and Koh resigned as executive director in June.
Soh is also said to owe several banks money and is apparently paying tens of thousands of dollars a month to various brokers who work for him. For now, he appears to be making good on his obligations. “He is still helping us. At the very least, our livelihood is not affected,” says one of those questioned by CAD. As this person tells it, Soh is quite unlike the “bad hat” that he was many years ago. “He may have had a bad reputation in the past, but he’s a changed man. He won’t leave his men in trouble.”
Others think it is just a matter of time before Soh will be unable, or unwilling, to do anything to assist those under CAD’s watch, even if they are close to him. “How he is as a player in the market is how he is as a person. There’s no difference,” says a fund manager.
Soh started his career as a shampoo salesman in Malaysia in the 1970s and went on to build a bunch of companies over the years in several businesses, including construction and hospitality. By the mid1990s, he was in control of a string of companies in Malaysia. In Singapore, he held key stakes in Inno-Pacific Holdings, now known as Innopac, and IPCO.
In 1999, Soh fled Malaysia after the authorities accused him and another Malaysian of defrauding Omega Securities, a stock broking firm. He returned to the country in 2002 and was immediately arrested and charged, and convicted several years later.
Before his return to Malaysia, he was said to have been involved in another Singapore-listed company, Links Island Holdings, which is now known as Manhattan Resources. SGX suspended trading of Links Island’s shares in August 2000, just a few months after the company listed, alleging that the stock was cornered. Soh’s name also surfaced during court hearings in 2001 involving Mid-Continent, but he was not charged at the time.
What exactly has Soh been trying to achieve with all his deals over the last two decades? Why do they keep going wrong? Should investors avoid stocks linked to him? Or should they play along?
A former dealer who now runs his own investment firm says while those much younger than Soh, who is in his 50s, may see him as a veteran in the stock market, his modus operandi has not changed over the years and is not sustainable.
“The people who got hit in the collapse last year are people I call young adults, with about 10 years of experience in the stock market. They have not seen how our friend operated in the past. People from my generation with over 20 years of experience have seen John Soh’s track record,” he says.
“His style is what I call old-school style: pump and dump. Had the fundamentals of these companies caught up [with their share-price gains], everything would have been fine. But it was a game that went wrong. It exploded in their face. Although I dealt with him in the past, I dealt with him with a pinch of salt.”
A former mid-level executive of one of the companies involved in last October’s crash describes Soh as being persuasive and capable of inspiring great confidence. “John has spin doctors who are very loyal to him and who believe he will save them. People call him the ‘lovable rogue’, but there’s really nothing much lovable about him.”
The executive adds that Soh can be overbearing at times, leading to clashes with people appointed to run his companies. Notably, Soh’s insistence on calling the shots at LionGold as adviser to the chairman was a reason Nicholas Ng quit after a short stint at the gold miner. “Nicholas joined a relatively small company, and here was [Soh) calling for meetings with LionGold’s board members and having discussions of his own on potential acquisition targets for the company.” Soh even went as far as directing LionGold to involve itself in matters related to other companies. He was said to have got LionGold to pay for a first-class seat for diamond-mine investor Joseph Gutnick on a flight from Canada to Singapore last year. Gutnick is chairman and CEO of Australialisted Merlin Diamonds, which Blumont is in the process of acquiring. Innopac offered to buy the diamond producer last year but failed to complete the deal. “Why would you bring in a high-level manager - and Nicholas is a high-level manager - if you still intended to run the show? That’s not how you run an SGX-listed company,” says the former mid-level executive.
As the anniversary of the Oct 4 crash draws near, the aftermath continues to be felt. Among other things, AmFraser Securities was acquired this past week by Taiwan’s KGI Securities for $38 million. The stock broking firm’s exposure to the three stocks came to about RM120 million ($47.5 million), prompting its Malaysian parent AMMB Holdings to make a RM40 million provision for itself late last year. Meanwhile, changes to longstanding market practices unveiled recently by MAS and SGX will soon be implemented. Among the measures, which will take effect as early as year-end, are a minimum trading price of 20 cents for companies on the Mainboard. This is to address the risk of low-priced stocks being more susceptible to excessive speculation and potential manipulation. A down payment of at least 5% on stock purchases will also be required from mid2016. The move is meant to discourage investors from taking on excessive leverage and to reduce reliance on remisiers to manage their clients’ credit risks.
The Securities Association of Singapore has also been tasked with developing guidelines to promote the transparency of trading restrictions imposed by brokerages on certain stocks. Several major braking houses imposed such curbs on Asiasons, Blumont and LionGold last year as they soared. SGX itself took the unusual step of suspending trading in the three stocks less than an hour after the opening bell on Oct 4. It lifted the suspension the following trading day, but banned contra trading and short-selling in the three counters, a move that some dealers believe played a big role in the stocks’ downfall.
Despite all that the regulators are doing, however, the Singapore market is unlikely to be able to put the whole saga behind it until all the facts related to the crash are uncovered and the identities of the people involved come to light. The sooner CAD and MAS conclude their investigation and take action, the better for everyone.
Referring to our current story “Hunting for the Truth”, Blumont Group has informed us that the company is not and never been the sponsor of the employment pass for SCW. We also accept that LionGold did not pay for first class seat from Canada to SG for Joseph, the Chairman and CEO of Merlin Diamonds, which Blumont is in the process of acquiring. The errors are regretted.