Public Prosecutor v Lim Hong Boon

• Jurisdiction: Singapore
• Judge: Bala Reddy
• Judgment Date: 04 March 2022
• Neutral Citation: [2022] SGDC 47
• Court: District Court (Singapore)
• Docket Number: District Arrest Case No 901329 of 2019, Magistrate’s Appeals No 9042-2022-01
• Published date: 07 April 2022
• Year: 2022
• Hearing Date: 11 August 2021,27 January 2021,07 June 2021,17 August 2021,11 May 2021,26 January 2021,13 October 2020,29 June 2021,16 December 2020,12 October 2020,14 January 2022,04 March 2022,06 December 2021,17 December 2020,29 April 2021,16 August 2021,28 January 2021,18 August 2021,14 October 2020,08 June 2021,15 June 2021,25 January 2021,16 February 2022
• Plaintiff Counsel: Hon Yi and Norman Yew (Attorney-General's Chambers)
• Defendant Counsel: Kesavan Nair and Melissa Leong (Bayfront Law)
• Subject Matter: Criminal Law,Statutory offences,Companies Act,Carrying on business for fraudulent purpose
• Citation: [2022] SGDC 47

Senior District Judge Bala Reddy: Introduction

The focus of attention in this case was a company called Genneva Pte Ltd (“Genneva”) incorporated on 21 January 2008 with its principal activity based on the trading of gold. Genneva offered gold-based investment to its customers. The business model was to sell gold to customers at a mark-up over the prevailing market gold spot prices and guarantee a buy back at a higher-than-market price after a pre-determined contract period. During the contract period, Genneva would pay the customers a discount equivalent to an agreed percentage of the selling price on a monthly basis until the end of the contract period.

However, this was not a sustainable business model and Genneva appears to have run at a loss. By 2011, Genneva was in an ominous financial position when it launched a devious scheme, “Gold Inspection”, whereby its customers would become its short-term creditors. With its mounting liabilities Genneva enticed a large number of its customers to renew their gold purchase contracts, and in the process, deposit their gold with the company for a limited period of 3 days for an alleged “data-dot” process to authenticate the gold sold by Genneva. This seemed to be a ploy to hold on to the gold deposits for a longer period. Nearer the redemption date, the customers who were promised the delivery of gold were enticed with more attractive terms for further roll-over periods.

During the course of the trial, it became very clear that this entire process of Gold Inspection was nothing but an elaborate ruse to deceive the customers. Genneva carried on with the Gold Inspection scheme as part of its business with intent to defraud its customers between 17 August to 30 September 2012.

During this period the Accused was clearly in a position where he was an integral part of the Gold Inspection Exercise. He was effectively in charge of the collection of the gold from the customers and the subsequent disposal of the gold. His intimate connection with Genneva together with all his actions and conduct amply demonstrated that he had knowledge that Genneva was in poor financial condition and would not be able to return the gold to the customers.

I had no hesitation in finding that the Accused was a knowing and active participant in in the Gold Inspection Exercise and had shared in Genneva’s intention to defraud its customers and accordingly found him guilty of the charge under section 340(5) read with section 340(1) of the Companies Act (Cap 50, 2006 Rev. Ed.) (“Companies Act”).

The Charge

The Accused claimed trial to the following charge:

You, LIM HONG BOON are charged that you, in Singapore were knowingly a party to the carrying on of the business of Genneva Pte Ltd (the “Company”), with intent to defraud creditors of the Company between 17 August and 30 September 2012, being the period which the Company implemented a gold inspection exercise for customers to deposit their gold with the Company in exchange for a promise to return a similar quantity of gold to the customers three days later, for the purported purpose of inspecting the authenticity and purity of their gold, when you knew that the Company did not have any reasonable expectation of returning the gold within the stipulated timeframe given its financial conditions, and you have thereby committed an offence punishable under section 340(5) read with section 340(1) of the Companies Act, Chapter 50.

Undisputed Facts

Genneva was a private limited liability company incorporated in Singapore on 21 January 2008 by Leow Wee Khong and Liew Chee Wah. Each had one ordinary share in the company. Genneva had an issued share capital of $2 as at 31 December 2008. The company operated out of Orchard Towers occupying units at #08–06 and #08–09.

The principal activity of Genneva was trading of gold. It sold gold to its customers at a mark-up over the prevailing market spot prices (the “Selling Price”) and guaranteed to buy back the gold from the customers at the same Selling Price after a fixed period of days, usually 7 days following the expiry date of the contract period which could be in a range of between one month to six months.

During the contract period, the customers were entitled to an upfront discount of 1% to 12% of the Selling Price and/or also a monthly discount of 2% to 4.3% of the Selling Price. This was described as a purchase discount and was effectively a deduction in the Selling Price to the customers. Such discounts may be an upfront discount.

For ease of reference in these Grounds of Decision (“Grounds”), it would be useful to explain some of the terminologies that were used in Genneva. There were Group Marketing Consultants (“GMCs”), who acted as supervisors and whose role was to discuss how to improve various aspects of Genneva’s operations and to deal with feedback from consultants.¹ The GMCs formed a small committee from which Genneva would seek feedback on ideas for new promotions of Genneva’s products. A “consultant” would introduce Genneva’s products to customers and help them transact with Genneva.

The Gold Inspection Exercise (“GI Exercise”) is a term used interchangeably with Gold Inspection Process. The GI Exercise was described by Genneva as follows: “[The] management… has decided to align Singapore’s gold authentication procedure with practices in Genneva offices in Malaysia and elsewhere. We call this Gold Inspection process (GI). The Singapore office is required to authenticate and verify each piece of gold sold to clients...”²

Prosecution’s Case

The Prosecution led evidence from 18 witnesses who testified in court, and additionally adduced the statement of another witness who was unable to be physically present in court or testify via Zoom.

Briefly the evidence of the witnesses was as follows:

PW1 – IO Normal Lee Khee Howe

PW1 Lee Khee Howe Norman (“PW1 IO Norman”), as the former Investigation Officer for this case, took over the investigations in July 2017 from another Investigation Officer. It was his evidence that the Commercial Affairs Department (“CAD”) had received more than 100 police reports against Genneva in September 2012. These reports largely related to gold deposited with Genneva pursuant to the GI Exercise which were not returned to the complainants who had also failed to receive their monthly payouts from Genneva.³ PW1 IO Norman testified that when the CAD commenced investigations on 1 October 2012, Genneva was still operating.⁴ In the course of investigations, no gold bar was seized as none was found.

PW1 IO Norman was also responsible for recording the Accused’s statements: Exhibits P37 to P42. There was no challenge to the voluntariness,⁵ or the accuracy⁶ of the statements recorded by him.

PW2 – Aaron Kwok Fong Loong

The prosecution’s next witness was, PW2 Kwok Fong Loong (also known as “Aaron”) (“PW2 Kwok”) who had been earlier convicted on his guilty plea to a charge of knowingly being a party to the carrying on of Genneva’s business with intent to defraud creditors under section 340(5) of the Companies Act,⁷ and was sentenced to 56 months’ imprisonment. When giving evidence he was a prisoner serving his sentence.

PW2 Kwok testified that he was employed between 2010 and 2011 by a Malaysian company called Samudra GV Sdn Bhd as a marketing development manager.⁸ The company was later renamed as Genneva Malaysia Sdn Bhd (“GM”). In 2012, PW2 Kwok was seconded to become the general manager of Genneva in Singapore.⁹ He testified that Genneva Singapore’s business in buying and selling gold was similar to that of Genneva Malaysia Sdn Bhd’s business.

He gave evidence that the Accused had worked as his colleague in Genneva Singapore from June to September 2012.¹⁰ It was his evidence that the Accused was in charge of Genneva’s Gold Department which controlled Genneva’s gold inventory and the GI Exercise. In such capacity, PW2 Kwok stated that the Accused knew how much gold Genneva had collected and how much gold was physically stored with Genneva.¹¹ He further testified that the Accused was also responsible for the physical gold entering and leaving Genneva.¹² Although PW2 Kwok was the general manager, he however, strangely claimed that he did not know the specific role the Accused played in the GI Exercise or in the movement of the gold.¹³ He did admit however, that during the period of the GI Exercise (the “GI Period”), there were complaints from the GMCs that their commission payments were delayed.¹⁴

It was quite clear that PW2 Kwok was less than candid in many aspects of his evidence and was a rather reluctant witness against his former colleague, the Accused.

PW3 – Goh Seow Mooi

PW3 Goh Seow Mooi (“PW3 Goh”) was a customer of Genneva who later became its consultant and GMC. As a consultant, she recommended Genneva to potential customers.¹⁵ PW3 Goh testified that as a GMC, she supervised a group of consultants, whose role was to discuss how to improve various aspects of Genneva’s operations and to deal with feedback from consultants.¹⁶

She explained how a regular sale transaction in Genneva was conducted. She stated that under a buying scheme where physical gold was involved, the customer would pay a discounted price to buy gold. At the expiry of the contract period, a customer had the option of selling the gold back to Genneva at the undiscounted price.¹⁷ Under a buying scheme where no physical gold was involved, the client would pay a discounted price for gold, but the gold would be kept by Genneva. In the course of a contract period, Genneva would make periodic payments (known as “discounts”) to the customer. At the end of the contract period, the client had the option to sell the gold back to Genneva at the undiscounted price.¹⁸

PW4 – Andre Toh Sern

PW4 Andre Toh Sern (“PW4 Toh”) is the Prosecution’s expert witness who prepared the Expert Report.¹⁹ In his Expert Report and during his testimony...