Ex-director at multiple firms admits misappropriating $7 million

SINGAPORE – He was the executive chairman and managing director of investment holding company KLW Holdings (KLWH) – now known as HS Optimus Holdings – and its group of companies when he misappropriated $7 million.

At the time of the offence, Lee Boon Teck, 58, also held directorships in several companies within the group including Ambertree and Barang Barang.

Lee, who was no longer a director at HS Optimus Holdings, Ambertree and Barang Barang when

he was charged in 2021

, pleaded guilty on May 20 to one count each of criminal breach of trust and falsification of accounts.

Ten other charges will be considered during his sentencing in June.

His case is allegedly linked to Chan Ewe Teck, 60, then the sole director and shareholder of a firm called Straitsworld Advisory, which provided consultancy services to other companies. He is now known as Michael ET Chan and his case is pending.

Both men are Singaporeans.

Deputy public prosecutors Theong Li Han and Kiera Yu stated in court documents that Lee was introduced to Chan around 2010 or 2011. The prosecutors said that in 2011, Chan began introducing business opportunities for KLWH through Lee.

One of them involved projects in Zhangye in China for the acquisition of a state-owned hotel there and the development of the land surrounding the property.

The prosecution told the court that Chan floated the prospect of KLWH’s participation in the Zhangye projects to Lee in 2013.

Among other things, it was envisioned that for the hotel project, Straitsworld and another firm called White Group would first acquire the assets needed for it, before reselling the assets to KLWH at a mark-up.

In connection to the projects, Straitsworld and White Group entered into an agreement with the Zhangye government on April 23, 2014.

The prosecutors said: “(Lee) did not inform KLWH’s board of directors of the Zhangye projects despite knowing that any corporate decisions he made for KLWH and the group required the board’s formal and express approval.”

The court heard Chan later told Lee that commitment fees totalling $14 million for the Zhangye projects had to be paid to Straitsworld.

In May 2014, Lee handed Chan two cheques addressed to Straitsworld from Ambertree’s bank account for $7 million. He later handed over two more cheques addressed to Straitsworld from KLWH’s bank account for a second payment of $7 million.

The prosecutors said that prior to June 21, 2014, Lee told Chan he needed $7.8 million to buy KLWH shares.

The prosecutors added: “The two agreed that Chan would provide the $7.8 million to (Lee) as a loan, for his share subscription. However, the deadline to purchase the shares drew near, and Chan could not obtain the full $7.8 million in time.”

Court documents stated that Chan and Lee agreed to use the commitment fees of $7 million from KLWH to fund Lee’s share subscription first, as a loan.

Lee then misappropriated the second payment of $7 million.

The prosecutors told the court that by about August or September 2014, discussions over the Zhangye projects had broken down and the parties did not enter into “definitive agreements”.

On May 6, 2015, KLWH’s group financial controller told the company’s independent directors that the commitment fees paid by Ambertree over the Zhangye projects were due to be refunded.

Following discussions between Lee and the directors, it was agreed that he would either try to resolve the projects, or obtain a refund of the commitment fees.

Lee met up with Chan on several occasions in attempts to recover the fees. The court heard that Chan told Lee that Straitsworld did not have enough funds to issue the refunds.

Lee then proposed that he would pay $7 million to KLWH first on Chan’s behalf.

As part of Lee’s plan, Straitsworld’s remaining obligation to return the other $7 million could be linked to another potential property development project involving Straitsworld, named “Project Happy”.

Details about this project were not disclosed in court documents.

The prosecutors said Chan agreed with this arrangement, and he provided a personal guarantee that he would be personally liable for the $7 million repayment should Project Happy fail to materialise.

In May 2015, Lee and his related parties transferred $7 million to Straitsworld, and this amount was later transferred to KLWH.

The prosecutors said: “Project Happy failed to materialise and as a result, KLWH commenced legal action in Singapore against Chan for the recovery of the (other) $7 million... Chan was only able to repay $5.75 million... and was made a bankrupt in 2018.”

To date, $12.75 million of the $14 million has been recovered. A sum of $1.25 million remains outstanding.

Separately, Lee also instigated two members of KLWH’s accounting staff to make false entries in the company’s financial statements.

This took place after he caused KLWH to engage in projects, including the one in Zhangye, as well as extend a personal loan of $1.95 million to him without the knowledge or consent of its board of directors.

The court heard that Lee managed to repay the $1.95 million to KLWH.