Pertamina Energy Trading Ltd v Credit Suisse

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang J
• Judgment Date: 16 January 2006
• Neutral Citation: [2006] SGHC 4
• Court: High Court (Singapore)
• Year: 2006
• Published date: 17 January 2006
• Plaintiff Counsel: Anjali Iyer (Anjali Iyer and Associates) and Oommen Mathew (Haq and Selvam)
• Defendant Counsel: K Shanmugam SC and Muthu Arusu (Allen and Gledhill)
• Subject Matter: Banking,Banker’s set-off,Plaintiff depositing money with bank under fixed deposit contract,Drawdown by plaintiff under credit facility,Whether bank entitled to set off loan against money held in fixed deposit -Whether bank put on notice as to forgery or fraud
• Citation: [2006] SGHC 4

16 January 2006

Tay Yong Kwang J:

1 The plaintiff, a Hong Kong company, is a wholly-owned subsidiary of PT Pertamina (“Pertamina”), the Indonesian national oil company. The defendant is a foreign company registered in Singapore as such and is a branch of a bank which has its headquarters in Switzerland.

2 The claim here is for the return of the sum of US$9m deposited by the plaintiff with the defendant under a fixed deposit contract made on or about 15 February 2002. At the centre of the dispute is a drawdown of US$8m under a credit facility granted by the defendant in the name of the plaintiff and the subsequent setting off of this loan by the defendant with the money held in the said fixed deposit. The plaintiff alleged that it did not instruct any drawdown and therefore demanded the repayment of its fixed deposit with all accrued interest from 15 February 2002 to 26 November 2003, the date of its letter of demand. The plaintiff also claimed that it terminated the banking relationship with the defendant by the same letter of demand and was therefore entitled to a detailed statement of the interest earned on the fixed deposit. The defendant contended that the drawdown was effected according to instructions given by the plaintiff and that the plaintiff was aware of the loan at all material times.

3 At all material times, the plaintiff had two directors, Muchsin Bahar (“Bahar”) and Burhanuddin Hassan (“Hassan”), both of whom were based in Jakarta, Indonesia. The top senior executive officers of the plaintiff were Soekono Wahjoe (“Wahjoe”), the President of the company, and Zainul Ariefin (“Ariefin”), the Vice President of Finance and Administration. These two officers were stationed in Singapore.

4 Haji Dedy Budhiman Garna (“Dedy”) was a businessman who controlled a company known as Aceasia Commercial Enterprises Pte Ltd (“Aceasia”), a private banking client of the defendant. Wahjoe and Ariefin knew Dedy as they had previously discussed a proposal for a financial scheme between Aceasia and the plaintiff. In late 2001, Dedy introduced the plaintiff to the defendant’s then relationship manager, Lim Chee Chien (“Lim C C”). At that first meeting, the plaintiff informed Lim C C that it wished to open an account with the defendant.

5 A second meeting was held around 19 November 2001 in a Singapore hotel. Ariefin and other officers of the plaintiff met Lim C C. Dedy also attended that meeting. The plaintiff indicated that it wanted to open an account with the defendant in order to diversify the investment opportunities of the US$40m it had in an account with BNP Paribas and to secure more business opportunities with Dedy/Aceasia in respect of oil tankers. Lim C C was told that Dedy/Aceasia had contacts with European oil trading companies and would be able to facilitate business deals between the plaintiff and those companies. Lim C C was also told that the plaintiff wanted to utilise the deposit with the defendant to generate higher returns and for loans and guarantee facilities.

6 On 17 January 2002, at a meeting held in Jakarta, Bahar and Hassan signed a directors’ resolution which had the following material terms:

OPEN BANK ACCOUNT WITH CREDIT SUISSE, SINGAPORE BRANCH

RESOLVED:-

(a) That an Account (“The Account”) be opened in the name of the Company with Credit Suisse, Singapore Branch.

(b) That the account and such other accounts as may from time to time be established by the Company with Credit Suisse, Singapore Branch be operated by any one of the following authorized signatories signing singly:

Authorized Signatories Title Specimen Signature

Soekono Wahjoe President (signed)

Zainul Ariefin Vice President (signed)

- Finance & Administration

(c) That the use of the Common Seal of the Company be approved and be affixed to the related bank documents regarding opening of the account.

7 On or about 14 February 2002, Ariefin told Lim C C that the plaintiff was opening an account with the defendant and that he should expect a remittance of US$9m for that purpose from BNP Paribas in Hong Kong. Wahjoe testified that the opening of the plaintiff’s account with the defendant was in accordance with the plaintiff’s standard operating procedure. Hassan was aware that the account was to be opened.

8 Lim C C then submitted to his senior management a Politically Exposed Persons (“PEP”) Report, which assessed the plaintiff’s creditworthiness, and a Due Diligence checklist on the plaintiff. The senior management gave approval for the opening of an account for the plaintiff on the condition that the necessary account opening documents be submitted by the end of February 2002.

9 On 15 February 2002, Ariefin authorised the transfer of US$9m from BNP Paribas to the defendant. Wahjoe, who was in Iran then, had asked Ariefin to wait until he returned to Singapore so that they could discuss the matter further but Ariefin apparently disregarded his instructions. Nevertheless, Wahjoe did not pursue this issue as the plaintiff had already decided to move its banking operations to Singapore and the defendant was one of the banks that it was looking to for support. Wahjoe told Ariefin that he had three months to obtain the letter of credit facilities from the defendant. The money was deposited into an account in the plaintiff’s name and this was confirmed by a statement from the defendant dated 18 February 2002 sent to the plaintiff’s office here.

10 The defendant then received the following documents dated 18 February 2002 signed by Wahjoe and Ariefin on behalf of the plaintiff:

(a) Company Mandate;

(b) Account Opening Conditions;

(c) Specimen signature card containing the signatures of Wahjoe and Ariefin;

(d) Order relating to the retention of correspondence;

(e) Risk Disclosure Statement; and

(f) Certificate of Foreign Status of Beneficial Owner for US tax withholding.

11 Clauses 2 and 3 of the Company Mandate provided:

2 The Bank be authorised to honour any instructions relating to any activity acceptable to the Bank from time to time provided such instructions are signed by

Soekono Wahjoe singly

Zainul Ariefin singly

(being an “authorised signatory” or “authorised signatories” of the Company for all the purposes of this mandate.

3 The Bank be authorised and instructed at its absolute discretion to accept any instructions which it believes to be genuine from authorised agents of the Company whether given orally by telephone facsimile telegraph or cable and the Company agrees to bear the damages or any other losses resulting from reliance by the Bank upon any false forged or otherwise legally deficient instructions from the Company or from a third party purporting to act on its behalf and the Company agrees to bear any damages or other losses due to transmission by post telegraph, telephone, telex or any other mode of communication and resulting from losses, delays, misunderstanding mutilations or duplications except in the case of wilful or gross negligence on the part of the Bank and more particularly:

…

Clause 6 of the Company Mandate conferred on the defendant the right of set-off of money standing to the credit of the plaintiff against its outstanding liabilities.

12 Clause 1.2 of the Account Opening Conditions provided that the plaintiff authorised the defendant, at the defendant’s absolute discretion and until the defendant received from the plaintiff notice in writing to the contrary, to honour and comply with written instructions from either Wahjoe or Ariefin. Clause 15 of the same provided that the plaintiff would indemnify the defendant and hold both the defendant and its employees harmless from and against any and all losses, claims, actions, proceedings, etc unless arising solely from the defendant’s gross negligence or wilful default, which the defendant might incur or sustain from or by reason of the defendant acting or carrying out any instructions purportedly given to it pursuant to the said conditions.

13 The plaintiff also requested (see sub-para (d) at [10] above) that statements of its account be kept on a retained mail basis by the Customer Services Department of the defendant.

14 In addition, the plaintiff submitted the following to the defendant for the opening of the plaintiff’s account:

(a) the plaintiff’s directors’ resolution dated 17 January 2002;

(b) the plaintiff’s Memorandum and Articles of Association and Certificate of Incorporation; and

(c) copies of the passports of Bahar, Hassan, Wahjoe and Ariefin.

15 According to Wahjoe, he signed the above documents in blank and without reading them when they were put before him by Ariefin. This was because he trusted Ariefin and Ariefin had already signed the same. He also trusted the defendant to complete the forms properly and truthfully. However, Wahjoe was aware that the documents were to be used to open a bank account with the defendant but did not appreciate that among the documents presented to him by Ariefin were documents that only the plaintiff’s directors could sign. Wahjoe was generally in charge of the trading activities while Ariefin took charge of the financial matters, including dealings with banks. There was no system of reporting to Hassan and Bahar before a bank account was opened. The opening of the account with the defendant was in accordance with the plaintiff’s standard procedure for opening bank accounts.

16 On 18 February 2002, Ariefin made an oral request to Lim C C for the urgent drawdown of a sum of money from a credit facility to be established by the defendant in the plaintiff’s favour. This sum of money was to be remitted to Aceasia. Ariefin and Dedy informed Lim C C that the drawdown was urgently required as the plaintiff owed money to Aceasia for oil contracts and oil tankers which had already been delivered. The plaintiff had originally requested that a bank guarantee be issued by the defendant to Aceasia. That request was, however, turned down as the transaction would involve two parties both of whom were the...