SINGAPORE: The High Court on Tuesday (Jul 29) allowed liquidators to claw back bonuses, commissions and other payments from former employees of the Envy group of companies that allegedly perpetuated a S$1.5 billion (US$1.16 billion) Ponzi scheme involving bogus nickel trading.
The court found two directors liable for about S$842 million, an administrative executive liable for S$1.9 million, and six employees liable for about S$42 million in total.
The judge said the billion-dollar fraud was perpetuated on “all and sundry, from the common man on the street to sophisticated investors who were seduced by the apparent attractive returns”.
The alleged mastermind of the scheme, Ng Yu Zhi, founded the Envy group of companies and is separately on trial for dozens of criminal charges including forgery, cheating and criminal breach of trust.
However, he declared bankruptcy after a partial judgment for about S$416.4 million and US$17.6 million was obtained against him.
The three Envy companies – Envy Asset Management, Envy Management Holdings and Envy Global Trading – and those firms’ three liquidators then turned to Ng’s former employees in a bid to claw back money.
Judicial Commissioner Mohamed Faizal said the purported nickel trading was non-existent. The Envy companies never transacted with an Australian company known as Poseidon Nickel to purchase London Metal Exchange Grade Metal, nor did they sell the nickel to any third-party buyers.
The trading was a Ponzi scheme propped up by various forgeries and false representations to the investors, said the judge, and none of the money from investors was used to buy nickel.
Instead, the funds were transferred to Ng, paid as directors’ fees to Ng and another director Ms Lee Si Ye, paid as commissions, profit-sharing payments, referral fees or other payments to various employees, paid as “profits” in excess of invested principal to investors, or transferred or paid to related entities such as other companies owned by the Envy companies.
TWO DIRECTORS FOUND LIABLE FOR MILLIONS OF DOLLARS
The High Court on Tuesday issued two lengthy judgments on the case. First, it found two directors of the Envy companies jointly liable for total sums of S$593 million, US$192 million and 880,000 euro (US$1.02 million). This amounts to about S$842 million.
This sum corresponds to the total amount of money owed by the insolvent Envy companies to investors.
Ms Lee, a trained accountant who came to know Ng during the course of her previous job as an auditor, was found fully liable for the entire sum.
The second director, Envy’s head of trading Mr Ju Xiao, was found liable for up to 40 per cent of the same sum.
The court also found administrative executive and client support associate Mr Cheong Ming Feng, who conveyed Ng’s instructions to another party to forge documents, liable for S$1.92 million.
Ng was the founder of the Envy companies and held at least 80 to 90 per cent of the ordinary shares of the companies.
Ms Lee held the remaining 10 to 20 per cent of the ordinary shares.
During her employment with the Envy companies, she was directly responsible and had oversight over the Envy companies’ “back-office functions”. These included accounting, updating of records of the flow of funds between the companies and investors and calculation of commission, salaries, bonuses and profit shares to be paid to employees.
The judge said Ms Lee clearly had some knowledge of the “various discrete aspects” of Ng’s fraudulent behaviour. She was “grossly derelict” in her duties and failed to make the sort of inquiries that any director should have made.
However, there was also evidence that she was being duped by Ng, as she had numerous family members invest money in the purported nickel trading. There was also evidence of Ng reassuring her that the business was legitimate.
The court found that Mr Ju was aware of, or chose to be “wilfully blind” about the hollow nature of the nickel trading. He forged four contracts and coordinated with Ng on what details were required, and knew that the purported trading was amiss.
Having experience in commodities and metal trading, he conceded that he did not personally invest in the trading as the returns seemed “too high”, the…
