A massive investment fraud scheme that allegedly ensnared high-profile investors such as Vickers Capital Group chairman Finian Tan and even notable names in Singapore's legal fraternity has stunned many, given the calibre of the investors involved and the amounts they lost.
Ng Yu Zhi, 34, a little-known businessman until four months ago, is accused of having swindled investors into putting at least $1.2 billion into non-existent nickel deals - making his the first investment fraud case here to hit the billion-dollar range.
The former managing director of trading companies Envy Global Trading (EGT) and Envy Asset Management (EAM), Ng faces 31 charges to date, most of them alleging cheating that took place between September last year and February this year. Other charges include fraudulent trading, forgery and criminal breach of trust involving at least $201.2 million.
Mr Tan was allegedly cheated of US$19.2 million (S$26.2 million). Other alleged victims include Temasek International general counsel Pek Siok Lan, criminal lawyer Sunil Sudheesan and former Law Society president Thio Shen Yi.
Ms Pek was allegedly cheated of $5.5 million, Mr Sunil of $1 million and Mr Thio of $87,000.
The Monetary Authority of Singapore had brought EAM and EGT to the attention of the Commercial Affairs Department (CAD) last November. After the CAD's probe into the two companies' activities, Ng was arrested on Feb 16 for suspected cheating. His bail on Monday was increased to $4 million from $1.5 million due to the seriousness of the additional charges. The police had separately uncovered a plot to help him flee the country by land or sea.
But how did the scheme work, how did Ng get so many to believe him, and where did the money go? The following account is based on court documents seen by The Straits Times.
HOW THE SCHEME WORKED
According to the interim judicial managers from KPMG, EAM or EGT would buy nickel from Poseidon Nickel, a company listed on the Australian Securities Exchange, at a discount. EAM or EGT would then sell the nickel at a higher price to either BNP Paribas Commodity Futures or a company called Raffemet.
The investors would enter into agreements with Ng's companies, EAM or EGT, to fund the purported purchase of physical nickel from Poseidon.
EAM and EGT would transfer the investors' funds to Envy Asset Management Trading (EAMT), a British Virgin Islands company wholly owned by Ng. EAMT would make payment to Poseidon on behalf of EAM/EGT and also receive sale proceeds from BNP and/or Raffemet on behalf of the two companies.
The investment returns would then be the profits from the sale of nickel to BNP or Raffemet.
Investors were promised returns that averaged 15 per cent, over an investment period of three months. Many investors rolled over their contracts after the end of three months to reinvest their principal and returns.
In reality, the purported nickel trading was non-existent and the documents presented in support of the purported nickel trading were forgeries, the interim judicial managers found.
They found that aggregate payments of $238.6 million made by EGT to a purported EAMT account actually went to two Singapore bank accounts owned by Ng.
WHAT NG DID TO MAKE IT LOOK CONVINCING
Much was done to convince investors of the existence of the purported nickel trading.
This included forging documents - and recording a video that showed Ng and Ms Lee Si Ye, deputy managing director of the Envy companies, inspecting a shipment of nickel in a Singapore warehouse.
While this was done to convince investors that nickel was being purchased from Poseidon, it was in fact allegedly bought from Raffemet - and then sold back once the video had been shot.
But the purchase from Raffemet cannot be traced to any investment agreement, the interim judicial managers said.
Apart from being lured by the promise of generous returns, many investors were also attracted by the fact that a number of prominent investors were investing in the scheme.
The interim judicial managers also found a slew of irregularities in Envy's documents.
1. Buying nickel allegedly for a video to convince investors Among the irregularities alleged, EGT bought nickel from Raffemet and then sold the same quantities back to Raffemet shortly after a video recording of the purchase was shown to investors.
The interim judicial managers said this nickel was "unrelated to the investors' investments" as it "did not involve the purchase of nickel from Poseidon".
2. Inconsistencies in company names on contracts The report from the interim judicial managers also found inconsistencies in Poseidon's name in contracts purporting to sell nickel to Envy.
The Poseidon contracts record "Poseidon Nickel Limited" as the contractual counterparty. But, in certain other contracts, the signing pages record "Nickel Poseidon Ltd" as the signing entity.
Other irregularities included identical imperfections and illegible areas in the signatures of both of Poseidon's signatories in the Poseidon contracts signed on three dates in 2019: April 1, July 1 and Oct 1.
3. Doing business with a defunct entity
BNP Paribas Commodity Futures was no longer authorised to conduct regulated business as of Feb 4, 2019, and was closed on March 15, 2019.
Yet strangely, nine statements purportedly issued by BNP Paribas Commodity Futures have a date after Feb 4, 2019. And all of the receivables purchase agreements in April last year had BNP Paribas Commodity Futures terms appended that record BNP Paribas Commodity Futures as the buyer.
As at May 25, BNP Paribas Commodity Futures has not responded to the interim judicial managers' requests for confirmation of any business ties with EAM or EGT.
WHERE DID THE MONEY GO?
The tracing of fund flows is ongoing, but KPMG has estimated net outflows of about $475 million to Ng from his Envy group of companies, including transactions that were not recorded in company bank records.
Ng led a lavish lifestyle with personal monthly expenses of about $2 million, including for private jet flights, butler and chauffeur services, alcohol, expenditure at nightclubs and upmarket restaurants, and expenses associated with multiple luxury cars and "significant monetary gifts to his close associates".
A $5.4 million payment was also allegedly made to Ng's "family in China", according to court papers.
About $100 million worth of his assets seized by the CAD included a rare multimillion-dollar Pagani Huayra Italian hypercar - the only one in Singapore - and a Porsche 911 GT3, according to earlier ST reports.
ST understands that other assets seized include jewellery, watches, artwork and high-end bags like Hermes' Birkin. Some of the $841.5 million of investor funds was also alleged to have gone to Ng's associates, including nearly $22 million to Ms Lee.
Among the investors, 424 reaped $119.7 million in so-called profits from the bogus nickel investments with EGT, and may be asked to return the monies.
About $43.6 million in commissions and profit-sharing payments went to employees, and $24 million in referral fees was allegedly paid to investors for bringing in other investors, the interim judicial managers found.
About $64.5 million of outflows is yet to be verified.
WHAT NOW?
The KPMG team said legal proceedings, including claims against Ng and Ms Lee for all liabilities incurred by the Envy companies in relation to the nickel trading scheme, will begin after the High Court rules on whether the companies should be put into liquidation.
A hearing on the winding-up application is scheduled for Aug 16.
The interim judicial managers want the companies to be wound up as "none of the purposes of a judicial management can be achieved".
This is because the Envy companies' nickel trading is "non-existent; there is no other meaningful business undertaken by them and their assets are grossly insufficient to meet the potential claims of their creditors".
Correction note: In the earlier version, we said that Envy-ex director Ng Yu Zhi's bail amount was increased to $4 million from $1.5 million after police uncovered a plot to help him flee the country by land or sea.To clarify, the court raised Ng's bail amount due to the seriousness of the additional charges and did not find that there was an increase in flight risk.
