MAS succeeds in freezing ex-CEO's assets
The Business Times
THE Monetary Authority of Singapore (MAS) has succeeded in a legal bid to permanently freeze US$3.7 million (S$4.6 million) in funds belonging to the former chief executive officer of China Sky, ahead of the completion of a probe into the company for possible breaches of the securities law.
High Court Justice Belinda Ang found Mr Huang Zhong Xuan, a Chinese national, to be the true owner of the assets in a Credit Suisse AG account in Singapore, despite the account being in the name of Build Up International Investments.
The assets comprise shares in Trony Solar Holdings, dividends and proceeds of the sale of shares.
Justice Ang, in a 60-page decision handed down on Tuesday, found that Build Up, a company registered in the British Virgin Islands, had "all the common characteristics of a special-purpose vehicle used to divert attention from Mr Huang and, as far as possible, conceal the true beneficial ownership of the assets".
MAS, represented by Senior Counsel Cavinder Bull of Drew & Napier LLC, was awarded legal costs and granted a final order preventing Mr Huang from further dissipating the assets from the account. He allegedly transferred US$10 million out on March 5 last year.
The Business Times understands that the judgment will ensure that there are funds available to satisfy any liabilities, should the Commercial Affairs Department's probe end in a fine or a penalty assessed for breaches of the Securities & Futures Act.
Justice Ang also found that portions of evidence given by the alleged beneficial owners of Build Up and the Trony Solar shares - Mr Huang's daughter, Ms Huang Yiling, and Mr Lau Kam Sze - to be "inherently improbable, strained and unconvincing".
She wrote that the pair, named as Mr Huang's business partners, were "particularly unsatisfactory witnesses": "Their ambivalent attitudes towards the opening of the bank account went towards showing that they were nominee directors and shareholders, and were acting on Mr Huang's instructions.
"Mr Lau's inconsistent evidence is the product of a story that was being made up at each turn. This accounted for his inability to properly justify his decision to set up Build Up with Ms Huang and to jointly invest in Trony Solar. Upon further cross-examination by Mr Bull, Mr Lau blamed the inconsistency on the incompetence of the translators of his affidavits."
In finding Mr Huang to be the true owner of the assets, Justice Ang accepted evidence by MAS' key witness - Ms Lillian Liao, a Credit Suisse relationship manager who had handled the account - as "consistent with the documents", and that she took instructions almost exclusively from Mr Huang or his Hong Kong assistant, Mr Sunny Hui, on how the account was to be run.
She added that the failure of both Mr Huang and Mr Hui to turn up as witnesses at the trial (without offering valid reasons) to be cross-examined on the issue of beneficial ownership was "a factor which the court is entitled to give some weight".