Witness James Hong has been impeached by the prosecution for multiple inconsistencies in the testimonies he gave in court, versus statements he made earlier to the police.
Hong, a former executive director of Blumont Group, recently took the stand at the long-running trial of John Soh Chee Wen and Quah Su-Ling. The duo are on trial for allegedly orchestrating a massive share manipulation scheme that sent the prices of Blumont, LionGold Corp (since renamed Shen Yao Holdings) and Asiasons Capital (renamed Attilan Capital and subsequently, delisted).
When the prices of these three shares crashed under short selling pressure in October 2013, some $8 billion in market value was destroyed.
The trial has thus far seen dozens of witnesses taking the stand. They include brokers allegedly taking trading instructions from the accused, namely Ken Tai, Gabriel Gan, Henry Tjoa and Wong Xue Yu. Witnesses also include known close associates of the duo, such as Soh’s long-time colleague turned friend Dick Gwee Yow Pin and Adeline Cheng, who was apparently in a love triangle with Soh and Quah.
Former IPCO International’s interim CEO Goh Hin Calm, who was previously the third person to be charged along with Soh and Quah, had also testified after he pleaded guilty.
The share manipulation was allegedly carried out using a web of dozens of trading accounts, including six under Hong’s name.
Under examination by deputy public prosecutor (DPP) Teo Guan Siew, the court was told how Hong often sought Soh for trading advice and that Soh and Quah had given trading instructions via Hong’s accounts, purportedly on his behalf.
On top of these, it was alleged that Hong got all the advice and help, for free. “Are you very close to Mr Soh and Ms Quah?” asked DPP Teo. “Well, he has offered to help me to look at my portfolio, and an offer was made and it was accepted. So it was a quite natural progression,” said Hong. “Do you know if he was doing it for any other — anyone else other than you, or are you special?” asked the DPP. “No, I do not,” said Hong.
The “help” extended by Soh to Hong stretched from 2006 till 2013. Besides purportedly giving advice, Soh was also actively doing rollover contra trades in Hong’s accounts. “Why? You must be very special to him, Mr Hong,” asked DPP Teo. “I hope I am,” replied Hong.
Multiple inconsistencies
Hong, a former Singapore Armed Forces (SAF) scholarship holder, was a regular in the navy before entering the commercial world. At the introductions of Richard Chan, another former Blumont executive director, Hong joined Blumont in 2003, first as an independent director and then an executive director, supposedly to help then executive chairman Neo Kim Hock, who was purportedly trying to change Blumont’s business from IT services to mining.
Neo is known to be an associate of Soh and Chan and is known as the former’s “blue eyed boy” for his ability to bring a series of deals for Soh and his associates to invest in.
One reason for Hong’s impeachment by the prosecution was because of the inconsistencies he gave when talking about his relationship with Soh. He told the court that he first met Soh around 2002 or 2003 and that they kept in constant contact after that, meeting once every two or three months. “Things progressed and Soh became an advisor to me giving me financial advice for share investments,” Hong said.
He later added that from 2011 onwards, he was in contact with Soh daily, as Hong sought out Soh’s advice for trading shares. Hong also told the court his interactions with Soh became more specific as Soh was “instrumental” in helping Blumont look for mining investments.
However, Hong had said something different in his earlier statements given to the Commercial Affairs Department (CAD). He also gave conflicting accounts.
In one statement made in April 2014, Hong said he met Soh for the first time around 2000 or 2001, and they subsequently met a couple more times. Hong said he was introduced to Soh at a social event. The other two times Hong met Soh were “accidental” meetings. “I was out having coffee. I happened to bump into him. We would acknowledge each other and maybe chat a little. These are the only instances I had met John,” Hong told CAD.
Four months later, Hong told CAD that when he said he met Soh only once or twice, he was referring to the time before 2011. They had “a few more meetings” after that, as Soh had contacts or information of interest to Neo as Blumont’s executive chairman. “During these meetings, I may have sought Soh’s advice for my personal investments. But I really cannot remember the reason why I would have allowed him to place the trades in my account,” Hong told the CAD.
No reason
Hong gave different answers when asked about the trading instructions placed via his accounts. He told the court when he is not available — like when he was on a flight, for example — he would ask Quah and at times Soh for help to call the brokers to execute the trades.
In contrast, he first told the CAD that no one else was involved. “All the trades in accounts under my name from Mar 2013 to Oct 2013 were placed by me,” he told CAD in April 2014. Hong maintained that line under repeated questioning. “I confirm that I am the only one who gave instructions to the trading representatives of the respective trading firms to place trades,” he said. “I did not ever authorise anyone else apart from myself to directly contact the trading representatives to place orders on my behalf in all personal accounts with local brokerages,” he added.
But in his subsequent statement taken by the CAD, Hong changed his tune. He described during meetings with Soh and Neo, he may have asked Soh for advice regarding his own investments. “I think Soh may have brought up the idea of him managing my personal accounts,” Hong told CAD. “I had indeed let Soh manage my DMG Securities accounts. It means that he is able to place trades without going through me or requiring my approval,” he added.
Hong was also inconsistent when asked about the decision-making for trades done in his accounts. He told the court that he was in touch with Soh daily as Hong sees him as his “personal advisor” on investments. “Since as early as 2006, Soh has been giving advice and monitoring the market on my behalf, and the strategy deployed was to engage in a majority of contra trades. Trading advice that Soh gave was on what price to sell, when to sell and how much to pick up,” said Hong.
In the first version of his CAD statement, Hong said he was the sole decision-maker on trades done via his accounts. He even had a trading strategy to share: “My strategy is to perform contra-trading and aim to make some money within three days before the settlement date. I trade in similar counters that appear in my company’s securities portfolio — for example, Asiasons and LionGold. For the local brokerage accounts in my name, I confirm that I was the only one to decide on the trades from account opening to date,” he told CAD.
In his second version to the CAD, Hong said Soh — as his advisor — had the power to decide on trades done via his accounts. “I think I had named the accounts under the brokerage firms I had to Soh, and let him choose the accounts he wishes to manage himself. After all it doesn’t matter to me whether he’s managing an account under Brokerage A or an account under Brokerage B. We did not set a number on how many accounts I would pass to him so he was free to choose as many accounts as he wants. Soh has the power to decide whether to pick up the shares or to sell the shares on settlement date,” said Hong.
Why ‘we’ not ‘I’
The court was also shown a series of phone messages between Hong and one “DJS” — Datuk John Soh, showing a set of trading instructions from Soh to Hong, who claims those messages were “advice” not instructions.
Yet, in one such message, Hong wrote to Soh: “Done 450AS.” When asked by DPP Teo why Hong got to report to an “advisor”, Hong tried to explain “it could be a habit.” “Mr Hong, didn’t you earlier tell us that the whole reason why you wanted Mr Soh to help with this, in this arrangement, is because you didn’t want to monitor the market?” said DPP Teo. “Correct,” said Hong. “But why are you the one updating him now? You are monitoring the market and you are updating him,” asked DPP Teo. “I’m not monitoring the market. I’m just informing him that, you know, I have done as per his suggestion,” replied Hong.
In another message on the morning of Feb 1, 2013, Hong messaged Soh: “Morning Dato, today 350AS due. Tks.” He did not receive a reply. At 2.13pm, Hong sent a follow-up message: “Datuk, we [have] 350AS due. Tks.”
“Why did you send this message to him twice?” asked DPP Teo. “Well, looking at the messages, it will be — and the time difference, it will be because I have not received a reply from him,” replied Hong.
“So, Mr Hong, why can’t you make your own decision if you can’t reach Mr Soh in the morning? Why do you have to send a follow-up message?” asked DPP Teo. “Well, I suppose it’s more of a, you know, confirmation that … if he has received my earlier message, then if not, then I’ll probably have put up the trade myself,” replied Hong.
“But you didn’t, you waited for the whole morning, and then in the afternoon, at 2.13pm, you messaged him again. Why do you have to do that? Do you always have to wait for him to tell you what to do before you place your trade?” said DPP Teo, asking what exactly was the advice Hong needed so badly from Soh.
Hong maintains that at the end of the day, he is the one who decides whether to follow Soh’s advice. “Because these are all your trades, according to you, your shares?” asked DPP Teo. “Yes, correct,” Hong replied. “Now, if that’s the case, then why do you use the word ‘we’ here? Why do you say, “Dato, we have 350 Asiasons shares”? Who’s the ‘we’?” asked DPP Teo.
Hong, cornered, said: “I think it’s a manner of … I don’t think it has any meaning, you know, yeah. It’s just, you know ...” DPP Teo pressed on: “No, but why don’t you say, ‘I have 350 Asiasons due, please advise’? Why don’t you say that?”
“I cannot remember,” replied Hong.
