OCM Opportunities Fund II, LP and Others v Burhan Uray (alias Wong Ming Kiong) and Others

JurisdictionSingapore
JudgeBelinda Ang Saw Ean J
Judgment Date01 June 2004
Neutral Citation[2004] SGHC 115
CourtHigh Court (Singapore)
Published date14 June 2004
Year2004
Plaintiff CounselDavinder Singh SC, Yarni Loi and Kabir Singh (Drew and Napier)
Defendant CounselChelva Rajah SC (Tan Rajah and Cheah), N Screenivasan, Derrick Wong and Jonathan Yuen (Straits Law Practice LLC),Shankar A S (Rajah Velu and Co)
Subject MatterCivil Procedure,Stay of proceedings,Fraud orchestrated from Singapore and Indonesia,Investment notes subject to New York Law,Whether Singapore more appropriate forum,Striking out,Plaintiffs' claim for unlawful act conspiracy,Whether plaintiffs' claim disclosed no reasonable cause for action, or was frivolous and vexatious or an abuse of process,Whether essential elements of unlawful act conspiracy made out,Rules of Court (Cap 322, R 5, 1997 Rev Ed) O 18 r 19(1),Injunctions,Mareva injunction,Application to discharge injunction,Whether good arguable case shown,Whether real risk of dissipation of assets,Whether material non-disclosure by plaintiffs
Citation[2004] SGHC 115

1 June 2004

Belinda Ang Saw Ean J:

1 On 19 January 2004, I granted to the plaintiffs the relief sought by way of their ex parte application for, inter alia, a worldwide injunction in the form of the draft order attached to the application (“the injunction”). The first to fourth plaintiffs are institutional investors. They are associated with and managed by Oaktree Capital Management LLC (“Oaktree”). The fifth plaintiff is associated with The Goldman Sachs Group Inc, and is managed by Goldman Sachs (Asia) LLC. Filed in support of the ex parte application were four affidavits. Melissa Obegi is the Senior Vice President and Associate General Counsel of Oaktree. She affirmed, on 14 January 2004, the principal supporting affidavit. Five volumes of exhibits were appended to her affidavit.

2 Mr Davinder Singh SC represents the plaintiffs. The defendants may be separated into two groups. The first group of defendants (“the majority defendants”) are: Burhan Uray (“D1”), Joseph Wong Kiia Tai (“D2”), Soejono Varinata (“D3”), H Sudradjat Djajapert Junda (“D4”), Hendrik Burhan (“D5”), Joseph Siswanto (“D6”), PT Daya Guna Samudera Tbk (“D7”), DGS International Finance Company BV (“D8”), WMP Trading Pte Ltd (“D11”), Betty Pai (alias Pai Sha) (“D12”), Borneo Jaya Pte Ltd (“D13”), Natura Holdings Pte Ltd (“D14”) and Handforth Profits Limited (“D15”). They are all represented by Straits Law Practice LLC. The second group of defendants, represented by Raju Velu & Co, are Rosmini bte Sulong (“D9”) and Gary Chan Wei Long (“D10”).

3 After the writ of summons and injunction were served, both groups of defendants filed separate applications to set aside the injunction and to strike out the writ of summons and statement of claim under O 18 r 19 of the Rules of Court (Cap 322, R 5, 1997 Rev Ed). The majority defendants sought, in the alternative, a stay of the proceedings on the basis that Singapore is not an appropriate forum in which to determine the dispute. The applications were filed on 6 and 14 February 2004 respectively. The majority defendants’ application to set aside the order for service out of jurisdiction of the writ of summons was abandoned at the hearing. In support of their respective applications, the defendants filed numerous affidavits totalling 30 in number. The plaintiffs, on their part, filed 11 further affidavits. Mr Chelva Rajah SC was engaged as counsel to argue the applications on behalf of all the defendants.

4 The applications were first heard on 6 February 2004 in respect of the prayers for extension of time to file a list of assets and the defence. At the conclusion of the resumed hearing on 4 and 5 March 2004, I maintained the injunction, but ordered the plaintiffs to fortify their undertaking as to damages. I also refused to strike out or to stay the proceedings. The plaintiffs were ordered, nonetheless, to furnish security for the defendants’ costs up to the current stage of the proceedings.

5 On 9 March 2004, the defendants appealed against my decision. The subject matter of the appeal pertains to my refusal to set aside the injunction, strike out or stay proceedings in respect of which I now publish my reasons.

Brief overview of the plaintiffs’ case

6 Broadly, this is a claim brought by the plaintiffs against D1 to D11 in which it is alleged that these defendants, or any two or more of them, conspired to and did defraud the plaintiffs of substantial sums of money by means of fraudulent misrepresentations by D1 to D11, or any two or more of them. The misrepresentations, made from time to time to investors such as the plaintiffs, were principally as to the true financial position of D7. The complaint is that the plaintiffs relied on the false financial information and were induced or otherwise influenced in their decision to purchase in the secondary market, on several occasions between 23 February 1998 and 16 May 2001 (“the relevant period”), bonds in the form of 10% guaranteed notes due 2007 (“the DGS Notes”).

7 The DGS Notes were issued by D8 sometime on or about 28 May 1997 (“the Offering”). Interest was payable by D8, bi-annually, on 1 June and 1 December each year, commencing 1 December 1997, at the rate of 10% per annum. The payment of the principal and interest under the DGS Notes was guaranteed by D7 under an indenture dated 28 May 1997 (“the Indenture”).

8 The DGS Notes were deposited in an electronic trading system form and they were actively marketed to institutional investors. The listing of the DGS Notes on the Luxembourg Stock Exchange was designed to facilitate trading in the secondary market. It was, so the arguments run, within the contemplation of D7, D8 and the individuals acting on behalf of D7 that a secondary market in the DGS Notes would be created as a result of the Offering. All investors and potential investors in the secondary market would, in making an investment decision, rely on the financial or other documents released from time to time by D7 for its earnings before interest, taxes, depreciation and amortisation (“EBITDA”) figures, income statements, balance sheets and so on. Moreover, the investors would rely on D7 as guarantor to pay the bi-annual coupon payments on the DGS Notes and the principal sum in the year 2007.

9 To the plaintiffs, other representations made in the Offering circular dated 27 May 1997, Information Memorandum and financial information released by D7 at various times were:

(a) that the proceeds of the Offering of US$250m would be advanced by D8 to D7 to fund certain expansion plans of D7; and

(b) a significant amount of the trade receivables were factored to banks in Indonesia with recourse upon default by the trade debtors.

10 D8 and D7 defaulted on the coupon payments in June 2001. The plaintiffs conducted investigations and the fraud was then uncovered. The outcome of the investigations formed the basis of their pleaded case. The misrepresentations, as listed in the plaintiffs’ skeletal submissions, were:

(a) The “third parties” continually represented in D7’s financials, from whom significant receivables were due, were actually related parties that were directly or indirectly owned or controlled by D1’s family.

(b) The receivables that were supposedly due to D7 from some of these companies were fictitious transactions booked into their accounts to create an appearance of genuine commercial sales.

(c) D7 entered into factoring agreements with various Indonesian banks, under which the Djajanti Group was obliged to reimburse the banks should the customers of D7 fail to meet their obligations to pay the receivables as and when they became due. In 1998, D7 entered into a credit agreement for discounting trade receivables with PT Bank Mandiri with a facility of US$15m, renewable on 22 April 1999, bearing interest at Bank Indonesia bills discounting rate. Without the genuine trade receivables, the factoring agreements were entered into with the intention of causing D7 to increase its assumed liabilities. This, in turn, affected its ability to pay on the DGS Notes.

(d) The proceeds of the Offering were not utilised solely for the expansion of D7’s business operations but were also used for the purposes of funding other businesses of the Djajanti Group, namely funding the illegal logging activities in Liberia. Funds flowed from D14 and an entity known as Lemonade Profit to D7’s accounts. The funds were used to purchase heavy logging equipment for use by Oriental Timber Company (“OTC”). The proceeds of the logging activities were apparently channelled back to D14 and to D15.

11 Specifically, representations on trade receivables purportedly due from unrelated “third parties” were made and repeated in the financial information released by D7. They included D7’s 1997 annual reports, D7’s consolidated financial statements for the year ended 30 June 1998 and 1998 annual report. By way of illustration, the financial statements in D7’s Information Memorandum prepared in 1996 by D7 for the purposes of the public offering in Indonesia of 100m new shares of par value Rp500 each represented that significant trade receivables were due from unrelated “third parties”. These trade receivables were represented as arm’s length transactions on commercial terms. D7 was said to have falsely represented that:

The Company [D7] sells all of its export products to unrelated trading companies in Hong Kong, China, Singapore and Thailand which sell the products to end customers. All such sales are effected by way of back-to-back letters of credit, which in the past has enabled the Company to minimise the risk of bad debts arising in relation to the majority of its business. The Company typically allows its customers between 30 and 90 days’ credit. These trading companies sell the Company’s products to export customers in China, Thailand, Japan, Hong Kong, Australia and Malaysia.

D6 admitted that he was involved in the issue of the DGS Notes but denies the existence of a conspiracy as alleged or at all.

12 Besides the representations contained in financial information released by D7, oral representations were made on behalf of D7 at various meetings between agents for D7 and the plaintiffs’ agents. Representations on trade receivables purportedly due from unrelated “third parties” were repeated. It was represented to the plaintiffs that D7’s cash flow position and its EBITDA figures, based on its financial statements, were very good. For instance, D7’s representative in Jakarta, Tri Yantono, the Finance Director of D7, met Vina Sadiathi as agent of the fourth plaintiff, on or about 9 August 1999 to discuss the business operations of D7. In conversation, Tri Yantono, on behalf of D7, represented to Vina Sadiathi that usance letters of credit backed the receivables purportedly due to D7 and the average accounts receivables were around three months. It was also alleged that at all material times, D6 was actively representing the state of business...

To continue reading

Request your trial
24 cases
  • Wu Yang Construction Group Ltd v Zhejiang Jinyi Group Co, Ltd and Others
    • Singapore
    • High Court (Singapore)
    • 11 September 2006
    ...International Trading Corp Sdn Bhd v Interamerica Asia Pte Ltd [2002] 4 SLR 537 at [59] and OCM Opportunities Fund II, LP v Burhan Uray [2004] SGHC 115 (“OCM Opportunities”) at [47] (for related decisions, see OCM Opportunities Fund II, LP v Burhan Uray [2004] 4 SLR 74 and OCM Opportunities......
  • Beckkett Pte Ltd v Deutsche Bank AG and Another and Another Appeal
    • Singapore
    • Court of Appeal (Singapore)
    • 27 April 2009
    ...not be independently actionable was in fact anticipated by the decision of our High Court in OCM Opportunities Fund II, LP v Burhan Uray [2004] SGHC 115. In that case, the court (citing the judgment of Colman J in Bank Gesellschaft Berlin International SA v Raif Zihnali (Queen’s Bench Divis......
  • The ‘Dolphina’
    • Singapore
    • High Court (Singapore)
    • 30 December 2011
    ...1 SLR 457 (refd) Njegos, The [1936] P 90 (folld) OBG Ltd v Allan [2008] 1 AC 1 (folld) OCM Opportunities Fund II, LP v Burhan Uray [2004] SGHC 115 (folld) Overseas Union Insurance Ltd v Turegum Insurance Co [2001] 2 SLR (R) 285; [2001] 3 SLR 330 (folld) Pacific Molasses Co v Entre Rios Comp......
  • Recordtv Pte Ltd v MediaCorp TV Singapore Pte Ltd
    • Singapore
    • High Court (Singapore)
    • 21 December 2009
    ...Gabriel Peter & Partners v Wee Chong Jin [1997] 3 SLR (R) 649; [1998] 1 SLR 374 (folld) OCM Opportunities Fund II, LP v Burhan Uray [2004] SGHC 115 (distd) Osprey, The [1999] 3 SLR (R) 1099; [2000] 1 SLR 281 (refd) Quah Kay Tee v Ong and Co Pte Ltd [1996] 3 SLR (R) 637; [1997] 1 SLR 390 (fo......
  • Request a trial to view additional results
3 books & journal articles
  • Tort Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2007, December 2007
    • 1 December 2007
    ...might tend not to regulate the arrangements between themselves in a formal manner: OCM Opportunities Fund II, LP v Burhan Uray[2004] SGHC 115. 22.14 Prakash J, after briefly reviewing the cases of Wu Yang Construction Group Ltd v Zhejiang Jinyi Group Co, Ltd[2006] 4 SLR 451 and Seagate Tech......
  • Case Note
    • Singapore
    • Singapore Academy of Law Journal No. 2014, December 2014
    • 1 December 2014
    ...843. 22 Broadcast Solutions Pte Ltd v Zoom Communications Ltd [2014] 1 SLR 1324 at [18]. 23 OCM Opportunities Fund II, LP v Burhan Uray [2004] SGHC 115 at [58]. 24Williams & Glyn's Bank v Astro Dinamico[1984] 1 WLR 438. 25 Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) s 16(1)(b). 2......
  • Civil Procedure
    • Singapore
    • Singapore Academy of Law Annual Review No. 2004, December 2004
    • 1 December 2004
    ...at [8]) where cross-examination was not necessary in the circumstances of the case. 6.81 In OCM Opportunities Fund II, LP v Burhan Uray[2004] SGHC 115, the defendant sought to set aside an ex parte worldwide Mareva injunction on the ground that the plaintiffs did not have a ‘good arguable c......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT