Chinese businessman alleges $74m theft by Singapore-based family office staff

An ultra-high-net-worth Chinese businessman is suing four former employees here for allegedly stealing from his Singapore-based companies, Panda Enterprise and Lee Fung International (LFI), through fraudulent transactions and fabricated claims over the years.

Mr Zhong Renhai alleged that the four former employees had abused his trust and confidence by siphoning $74 million into their own accounts over the years, or by misusing money belonging to him without authorisation.

He has sought a court order that grants a worldwide freezing order and proprietary injunctions against Ms Goh Sock Ngee, Ms Lim Wee Siew, Ms Eileen Ealham, Mr Yap Shin Tze and Singa Wealth (BVI) Holdings Ltd, an entity set up and controlled by the former employees who were all shareholders.

They were the only Singapore-based staff of LFI at the material time between May 2015 and February 2024.

On March 14, the Singapore High Court upheld a worldwide freezing order against the former employees and Singa Wealth.

Also known as a Mareva injunction, the court order prevents a party from disposing of or dealing with their assets. 

In granting what has been famously alluded to as one of the “nuclear weapons” of civil litigation, Senior Judge Tan Siong Thye said Mr Zhong has shown a “good arguable case” and produced evidence of fraud and dishonesty, establishing a “real risk of dissipation” of the defendants’ assets.

“On the face of the report, it seems clear that Zhong has a solid ground to allege that there were certain unauthorised payments made from his personal account, or LFI’s, and these transactions were orchestrated by one or more of the defendants,” the senior judge said.

The case first came to light in December 2023, when Mr Zhong discovered discrepancies in financial records. 

In late January 2024, Mr Zhong engaged external forensic accounts, Alvarez & Marsal (A&M), to independently investigate the alleged misconduct by the employees. 

The investigations were completed after nine months on Oct 25, 2024. A&M concluded that $74 million had been misappropriated and wrongfully paid out from either Mr Zhong’s or LFI’s bank accounts to the former staff.

Mr Zhong is the beneficiary owner of LFI and Panda Enterprise, a single family office set up in Singapore and regulated under the Monetary Authority of Singapore’s fund tax incentive schemes for family offices.

LFI is a liquefied petroleum gas trading company that was founded in 2012. Its customers are mainly manufacturers and traders in China and include Chinese national oil companies.

According to the court document, LFI and its employees provide accounting and finance support for Mr Zhong’s onshore China business.

In its investigation, A&M uncovered “illegitimate expense claims”, “false reimbursement claims” and “fictitious fees” as well as funds “possibly misappropriated from LFI’s dividend payable account to the employees”, instead of Panda Trading or Mr Zhong. 

The A&M report also found bonus payments paid to the employees which were not authorised by Mr Zhong as well as possible misappropriation of funds from Mr Zhong’s personal DBS account.

The judgment outlined several instances of “egregious dishonesty” on the part of the employees.

The most serious involved the creation of a fabricated MT103 Swift payment message used specifically for wire transfers between parties.

The fabricated MT103 reflects a transaction of US$22 million (S$29 million) from Singa Wealth to LFI on July 24, 2023. However, forensic investigations showed the transaction had never occurred.

Further analysis of Ms Goh’s work laptop revealed that it was created and amended on Oct 25, 2023 – the day the fabricated MT103 was sent to Mr Zhong.

Ms Goh has submitted she had accidentally sent the fabricated MT103 to Mr Zhong, and that it was a draft.

Another key finding was the severe under-declaration of salaries and bonuses by Ms Goh that have been issued to herself, Ms Lim and Ms Ealham between 2019 and 2022, the judge noted.

The forensic report found that Ms Goh, Ms Lim and Ms Ealham received a total of $8.4 million in excess payments that had not been properly disclosed to Mr Zhong during the period.

For example, in 2020, Ms Goh was paid $1.7 million, but internal financial reports falsely declared only $710,000. 

Ms Lim was paid $1.4 million, but falsely reported $471,760 in salary and bonus. As for Ms Ealham, she was paid $1.6 million and falsely declared only $537,600.

“The circumstances show that the under-declaration was done to mislead Zhong. This egregious dishonesty was deliberately done to deceive Zhong,” the judge said.

There were also the under-declarations of the account balance of Mr Zhong’s DBS account, the judge noted. 

On Jan 3, 2022, Ms Ealham sent a cash flow update to Mr Zhong, which reflected that his DBS account had a balance of US$816,692.95, when the actual balance was US$2.9 million.

From Jan 3 to March 3, 2022, forensic analysis showed $1.2 million had been transferred to Ms Goh.

All the former employees have individually denied that such dishonesty is present, arguing that the claims were unfounded and that Mr Zhong had authorised certain payments.

They cited an alleged “salary and bonus mandate” that gave Ms Goh the authority to determine their salaries and bonuses. However, Mr Zhong denied that such a mandate existed, and the court found no credible evidence to support their claim.

Singapore has attracted many wealthy people to set up their family offices here, with their number passing 2,000 at the end of 2024, up from 1,400 recorded a year earlier.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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