SINGAPORE - He was working for gold trading company Genneva when the firm implemented an "inspection" exercise for customers to deposit their precious metal with it.

They were also promised that a similar quantity of gold would be returned to them three days later.

But the now-defunct firm started defaulting on the return of the gold bars and finally racked up more than $46 million in losses for customers who participated in the "gold inspection" exercise. Court documents did not disclose the number of affected customers.

In a statement on Friday (March 4), the police said that Lim Hong Boon, 44, used to be Genneva's head of transactions.

The court heard that he was in charge of the gold collection and subsequent disposition aspects of the exercise.

The Malaysian was on Friday sentenced to five years' jail after he was earlier convicted of an offence under the Companies Act.

Senior District Judge Bala Reddy had found him guilty of the offence after a trial.

Genneva was in the business of trading gold bars.

Among other things, it offered a buy-back scheme under a contract which promised customers monthly returns of between 2 per cent and 3.1 per cent of the price of the gold they bought from the firm.

According to court documents, Lim knew that Genneva was not in a position to return the gold within the stipulated time frame because it was facing financial difficulties at the time.

Despite this, Lim had carried on its business to defraud its victims between Aug 17 and Sept 30, 2012.

To date, the firm's former general manager Kwok Fong Loong, then 65, was sentenced to four years and eight months' jail in 2020 after he pleaded guilty to one count of fraudulent trading.

In their submissions on Lim's case, Deputy Public Prosecutors Hon Yi and Norman Yew said that the firm was not profitable.

In an earlier court proceeding, the prosecutors told the judge: "When Genneva experienced financial problems, it decided to use its customers as a proverbial cash... cow.

"By dangling the bait of attractive returns to their customers, Genneva managed to entice a significant number of customers to renew their contracts, and in doing so, deposited their gold bars with Genneva for three days, initially."

The stated purpose was that the gold bars had to be inspected, thus earning the moniker of the "gold inspection" scheme or exercise.

The customers could then return after the stated period, where they would be given an equivalent quantity of gold.

The prosecutors said that by doing so, Genneva gained a "rolling stock of gold" which it used for its own purposes.

They added: "This, in itself, was wrong. Genneva was already in dire financial straits, and it was effectively borrowing gold from its customers for rolling three-day periods, thereby putting them at risk of losing their gold, should Genneva collapse."

The court heard that some "lucky" initial customers got back their gold, which came from the later customers.

But the prosecutors stressed that in over just a month, Genneva's financial situation went from bad to worse, and customers, who were deceived by the firm into leaving their gold with it, did not get back their promised precious metal.

The police said that Genneva collected about 3,500kg of gold during the exercise.

The police added: "Genneva did not conduct any test to ascertain the purity of the gold bars collected.

"Instead, the gold bars were sold, pawned or 'returned' to customers who had earlier handed over their gold as part of the... exercise."

The firm carried out the gold inspection exercise in the last months of its existence until the company ceased operations on Sept 30, 2012.

Officers from the Commercial Affairs Department then raided its offices at Orchard Towers the next day.

Lim, who had returned to Malaysia by then, was later taken back to Singapore after a warrant of arrest was issued against him. He was charged with an offence under the Companies Act soon after.

In his defence, he had claimed that his involvement in the gold inspection exercise was minimal and that he did not intend to defraud customers.

The court heard on Friday that Lim intends to appeal against his sentence. He was then offered bail of $70,000.