A businessman agreed to lend $500,000 to the founder of listed printing company Xpress Holdings without having met him.
Mr Thong Soon Seng said he met Mr KK Fong for the first time when he handed over the cash - five stacks of $1,000 notes - at a meeting with three others present.
Mr Fong, 62, signed an agreement to repay the loan with interest at 13 per cent in the first month and 10 per cent in the second.
Now, Mr Thong, 50, is suing Mr Fong for repayment after four cheques issued by the latter bounced. Mr Fong does not deny taking the loan but says he received only $390,000. He contends the interest charged was so exorbitant that the deal is not legally enforceable.
A three-day hearing on the lawsuit opened in the High Court yesterday. Mr Thong told the court he learnt from an acquaintance, Mr Christopher Lim, in June last year that Mr Fong needed a loan.
Mr Thong said he had never heard of Mr Fong but his research satisfied him that the latter was able to repay a $500,000 loan as he was the CEO of a listed company.
He said he handed $500,000 to Mr Fong on July 2 last year. Mr Thong's lawyer Edmond Pereira said Mr Lim and two others will testify that Mr Fong did not raise any concern when the agreement was signed and the cash handed over.
But Mr Fong contends this meeting did not take place. He said Mr Lim handed him the agreement to sign and later gave him $390,000, saying Mr Thong retained $110,000 as "advance interest".
His lawyer, Mr Jason Goh, said he did not read the agreement and did not know of the interest rate until he saw a demand letter from Mr Thong's lawyers.
Xpress started out as a name card printer before diversifying into Internet kiosks. It collapsed in 2000. Mr Fong disappeared from the Singapore scene in 2001 under a mountain of debt but made a comeback four years later.