New Lakeside ex-CFO pleads guilty; judge slaps S$80,000 fine, 3-year directorship ban

Former New Lakeside Holdings chief financial officer Oh Gim Teck pleaded guilty to one charge under the Securities and Futures Act on May 31, 2018.
Former New Lakeside Holdings chief financial officer Oh Gim Teck pleaded guilty to one charge under the Securities and Futures Act on May 31, 2018.ST PHOTO: WONG KWAI CHOW

SINGAPORE - New Lakeside Holdings' former chief financial officer Oh Gim Teck has been fined S$80,000 and banned from holding any company directorship for three years for his role in the company's breach of the Singapore Exchange's (SGX) disclosure rules.

Oh pleaded guilty to one charge under the Securities and Futures Act on Thursday (May 31) before District Judge Jasvender Kaur.

The 69-year-old Singaporean was with New Lakeside, which was in the business of producing and selling apple juice concentrate, as acting CFO from October 2004 to February 2007, before being appointed CFO from February 2007 to June 2010.

His troubles can be traced back to loans taken out by firms linked with New Lakeside, specifically New Lakeside Fruit Juice Xu Zhou Co (NLX) and Sanmenxia Lakeside Fruit Juice Co (SFJ).

As at Dec 31, 2016, NLX was a wholly owned subsidiary of New Lakeside; while SFJ was a former subsidiary of New Lakeside, which was fully disposed on Aug 31, 2006, following a restructuring exercise.

The court heard that Oh knew that NLX had guaranteed loans SFJ took with the Bank of China (BOC). The first involved a 15 million yuan (S$3.1 million) loan taken out on Jan 27, 2006. This was followed by another 15.5 million yuan loan taken on Feb 17, 2006.

When SFJ failed to repay an outstanding 22.75 million yuan, BOC took action against it and NLX in a Chinese court, and won its case in early 2007.

Oh was aware of this, and he knew that as a result of a repayment, NLX's liabilities would exceed its assets, making it insolvent.

SGX rules provide that a company must announce any information known to it concerning its subsidiaries, in this case, NLX.

This is to avoid the establishment of a false market, where information that would likely influence a decision to buy or sell the securities, is not made available.

NLX's liability had crystallised as early as August 2006 but New Lakeside only announced - for the first time - on Jan 26, 2010 that the BOC had taken action against NLX for the repayment of its outstanding loan.

Oh resigned as CFO on June 15, 2010.

By intentionally failing to notify the SGX of information that was likely to materially affect the price or value of New Lakeside securities, the firm had breached Rule 703 of the SGX listing manual.

Significantly, NLX's finance manager had also informed Oh of the crystallisation of NLX's liability on their corporate guarantees in the second half of 2008. Despite having knowledge of this, Oh had failed to promptly inform New Lakeside's independent directors about the need to disclose this information to the SGX.

In addition, Oh also consented to conceal this information as he believed that New Lakeside's former chief executive, Go Twan Heng, with whom he had a long working history with, would be handling the matter and be personally responsible for it.

New Lakeside was renamed Zhongxin Fruit and Juice in March 2013. The counter last traded at 0.9 Singapore cent apiece on May 2, and the company has a market cap of S$9.5 million.