SINGAPORE - For more than six years, a Singaporean company director breached United Nations sanctions and supplied luxury goods such as wine, perfumes, musical instruments and jewellery to a North Korean department store chain.
When the chain owed his company about US$20 million (S$27.3 million) in delayed payments, Ng Kheng Wah devised a fraudulent invoice financing scheme to cheat five banks of about S$130 million to tide over his cash flow problem.
On Friday (Nov 22), the 56-year-old man was sentenced to 34 months' jail, after he pleaded guilty to 10 counts of cheating and 10 counts of illegally supplying luxury items to North Korea in breach of UN sanctions. Another 140 charges of a similar nature were taken into consideration.
His company T Specialist International was fined $880,000 for supplying luxury items to a person in North Korea on 10 occasions, and for two counts of money laundering charges. Seventy-five other charges of a similar nature were considered.
Ng's accomplice, China national Wang Zhiguo, 57, was jailed for one year after pleading guilty to 10 charges of cheating, with 71 other charges taken into consideration.
The court heard that from November 2010 to January 2017, T Specialist directly supplied luxury items worth S$6 million to the Korean Bugsae Shop in North Korea.
The shop, owned by a North Korean identified as Li Ik in court documents, received the goods via Dalian, China.
Ng deliberately concealed the fact that the goods were destined for North Korea by not declaring the final port of delivery to the Singapore Customs, said Deputy Public Prosecutors Alan Loh and Thiam Jia Min.
Li Ik, and subsequently his 31-year-old son Li Hyon, arranged for payments to be made to T Specialist through front companies in China and Hong Kong.
According to court documents, Li Hyon had studied in Singapore and began helping his father with his luxury goods business here from late 2014 until early 2017.
Towards the end of 2013, Li Ik owed T Specialist some US$20 million in delayed payments for goods.
To generate liquidity, Ng conspired with Wang to deceive DBS Bank, CIMB Bank, Malayan Banking, RHB and OCBC into granting $130 million in trade financing loans to T Specialist. The loans were based on false invoices for mostly Watari-brand instant noodles to Wang's company Pinnacle Offshore Trading, which was incorporated in the British Virgin Islands.
In addition, Ng provided the banks with a contract between T Specialist and Pinnacle Offshore, explaining that the latter would help to collect money from T Specialist's debtors and source for Watari instant noodles.
He also instructed T Specialist to ship a few hundred cartons of the instant noodles abroad some time in 2014, to make the banks believe that transacting in instant noodles was indeed part of his business.
The banks then made the payments for 81 invoices totalling $130 million to Pinnacle Offshore, and the money was later transferred back to the accounts of T Specialist or Ng's other companies. Ng used the money to pay outstanding bank facilities and business expenses.
To avoid detection by the banks, Ng also suggested using another British Virgin Islands company owned by Wang's wife - Mars-Rock Offshore Trading - to further layer the round-tripping of money, said the prosecution.
Various trade documents, such as commercial invoices and delivery orders, from T Specialist and Ng's other companies to Pinnacle Offshore and Mars-Rock were also created to give the impression of genuine transactions, the court heard.
The ruse unravelled after the Commercial Affairs Department filed a police report on Aug 14, 2017, stating that it had received information that Ng and business entities related to him may be involved in money laundering activities.
The court heard that the banks ultimately did not suffer any loss as Ng repaid them in full.