Tensions apparently rose among individuals who were allegedly part of the network of account holders, nominees and brokers linked to the 2013 penny stock manipulation scheme allegedly headed by John Soh Chee Wen and Quah Su-Ling.
Adeline Cheng, who was in a romantic relationship with Soh, was heard lamenting that Soh did not put a distance between himself and Quah, whom he allegedly worked together to assemble the parts and the people needed to get the share manipulation scheme going.
In an audio recording presented to the court, Cheng told Soh, “You can never get her out of this thing ... she’s putting so many people around you.”
Soh replied, “No one can replace an infrastructure within a day or two, okay? It’s a 10-year-old infrastructure, I need time to replace, restructure, okay? To get her out of my hair, what can I do?”
In a later part of the recording, Cheng suggested to Soh, “Steve Phuah is the one.”
“Steve doing the trades is not the same as ISR, okay? Steve Phuah is my man.”
The duo was referring to Steve Phuah Cheng Hock, who was among the latest witnesses taking the stand at the long-running trial of Soh and Quah. ISR refers to ISR Capital where Quah was once CEO. The stock has now been renamed Reenova Investment.
Currently on trial, Soh and Quah are accused of masterminding a massive share manipulation operation centred on three counters: Blumont Group, Asiasons Capital (since then delisted) and LionGold Corp (renamed as Shen Yao Holdings), also collectively known as BAL. Soh and Quah had allegedly used a web of dozens of trading accounts belonging to associates and their families and friends to pump up the prices of the shares to stratospheric levels.
More like a lovers’ tiff
Deputy public prosecutor Nicholas Tan tried to get Phuah to admit he was taking trading instructions from Soh and Quah throughout the saga, but Phuah disagreed.
Tan then asked Phuah why Soh had described him as “my man”.
Phuah replied he had no idea. Referring to the recorded conversion, Phuah said, “I don’t know, but the whole thing sounds like a lovers’ tiff. Sorry.”
Phuah added he would be flattered if what Soh had said was true.
“But immediately after the crash, I was left without a job, I was making a living driving Uber for God knows how many years, and I’m fending for my livelihood and my family. In fact, to this day, I still don’t have a stable income. At this point in time, I’m painting pet portraits for a living, besides other things I do,” said Phuah.
Right up to the crash, Phuah, who held the role of investment director at Infiniti Asset Management (IAM), a subsidiary of ISR, had helped Quah and her associates manage trading accounts at Bank Julius Baer and Royal Bank of Canada, which provided financing of up to US$30 million for each account. Besides Quah’s accounts at Julius Baer, Phuah also managed the accounts of Neo Kim Hock and James Hong, Blumont’s former chairman and executive director respectively, as well as Nelson Fernandez.
At the peak, just before the crash in October 2013, these accounts had very substantial balances. The court was shown statements dated Sept 30, 2013, when Quah kept US$115 million in the account at Bank Julius Baer; while the accounts of Hong, Neo and Fernandez in the Royal Bank of Canada held US$118 million, US$136 million and US$161 million worth of shares and assets respectively. In total, that was a portfolio of half a billion dollars under Phuah’s management.
However, just days later, BAL shares, after surging for the better part of 2013, crashed spectacularly on Oct 4, wiping off $8 billion in market value and causing trading losses and bankruptcies to those exposed.
Following the crash, Phuah spoke to the banks to help work out how to mitigate further losses from margin calls his clients were facing. He told the court he spoke to Soh and Quah too, but could not recall what they actually said. “I guess everyone was also in a state of shock,” he said. The year following the crash, the Royal Bank of Canada sued the three men to recoup the money. Neo, Hong and Fernandez owed US$22.8 million, US$17.8 million and US$22.7 million respectively.
Cisco Systems and Warren Buffett
Phuah, an economics graduate from the University of London, joined IAM in 2011 as its investment manager. In late 2012 or early 2013, he was promoted to become its investment director, where he was responsible for the trading accounts of clients. He was introduced to the job by Richard Chan Sing En, who was running Dynamic Return (Singapore), another subsidiary of ISR. The CEO of ISR at that time was Quah Su-Yin, the younger sister of Quah Su-Ling.
DPP Tan tried to ascertain Phuah’s experience and qualification as an asset manager, and why he and his clients — Quah, Neo, Hong and Fernandez — were narrowly interested in trading mainly the shares of Blumont, Asiasons and LionGold.
Phuah told the court he felt that LionGold was akin to Cisco Systems, a US networking equipment company that grew via a series of value accretive acquisitions funded by its own rising share price in the 1990s. At one point during the height of the dotcom bubble, Cisco was the world’s most valuable company.
“I felt that LionGold was on a similar path, and it was on its way to realising good value for shareholders and the company itself,” he said, adding that up till the crash, he was still bullish on the stock.
Phuah, under questioning by Tan, said Soh gave him investment advice, especially pertaining to LionGold. As always, Soh’s advice to him was to buy.
“Mr Phuah, help us understand, you are a professional investment advisor … can you explain why you need to take tips from an outsider when trading for your clients?” asked Tan.
“Maybe it’s an over-characterisation of Datuk Soh. (But) it’s like if you meet up with Warren Buffet and Warren Buffet asks you to keep an eye on something, would you as a professional fund manager, in your position, put some weightage to what he says?” replied Phuah.
“So, was there something about Mr John Soh that made you think he would have some special insight about LionGold that you did not have?” pressed Tan.
“Well, I placed some weightage on his reputation in his past life. When I was a stockbroker, he was one of the young, up and rising pre-eminent stock market icons,” said Phuah.
Tan then asked if Phuah was familiar with the “negative aspects” of Soh’s reputation, and why he, as a professional investment advisor, was taking tips from a supposed outsider like Soh who was not even his client.
“I’m just going to ask you directly, Mr Phuah: Did you ever trade on non-public information from Mr John Soh on LionGold,” asked Tan, to which Phuah denied.
“You mentioned earlier that when Mr John Soh gives you these kinds of tips, you do a few things, you look at the macroeconomic conditions, you look at the market, et cetera. Did you also seek input from Mr Devin Kuek or your other staff regarding these stock tips that Mr John Soh is giving you?” asked Tan. referring to one of Phuah’s colleagues at IAM.
“Sometimes I do, but some of these tips could be impromptu, ad hoc tips, it’s like buy now, or whatever it is,” said Phuah, who also said he could not remember specifically if his clients had asked him to go seek Soh’s advice before making trades.
While Phuah had described his relationship with Soh as “pretty cordial”, Tan argued Phuah was actually actively trying to be close to Soh and was trying to impress Soh with his knowledge of the market and trading skills.
However, Phuah explained that he “loves to be friends with everyone, because it was good for business and helped build his business network.”
This then led Justice Hoo Sheau Peng to ask why it was important to impress Soh. “Because Datuk Soh was a ... or is known to be the advisor to the son of the ex-finance minister of Malaysia,” said Phuah, who added that he tried to interest Soh with some business deals although they all did not come through. On the other hand, Soh showed Phuah some deals too for ISR but “most didn’t pan out, if not all”, he added.
Winning streak
Phuah also told the court that, Quah, whom he talked over the phone regularly, would often tell him the latest prices of Blumont, as its share price kept going up.
“Some people just like to be on a winning streak, I guess,” he said.
When asked by Tan to clarify if Phuah meant Quah was telling him that prices will go up further, he agreed, and he told the court he interpreted what Quah said to him as stock tips.
“My question is: Did you ever act on such tips in respect of Blumont, Asiasons and LionGold?” asked Tan.
“If there was a standing instruction from the client, or other clients other than Ms Quah, yes, I may have,” said Phuah.
In his cross-examination, Philip Fong of Eversheds Harry Elias, who is defending Quah, got Phuah to agree that even though his client called him often to give stock tips, at the end of the day, Phuah was able to exercise his own independent judgement, do his own analysis drawing from his own experience, and decide whether or not to act on what she said.
“And it’s more about what Ms Quah tells you happened to coincide with your own opinion of the market, correct?” asked Fong.
“Yes,” said Phuah.
Fong further tried to show that there were days when Phuah and Quah spoke but no trades were done. This was meant to show that the prosecution’s argument that there was a link between the calls and trades was not always true.
“So what these examples show is that Ms Quah’s calls or communications to you are not necessarily BAL-related or not related to Mr Neo, Mr Hong or Mr Fernandez. Correct?” asked Fong.
“That would be correct, your Honour,” said Phuah.
