What fate awaits John Soh and Quah Su-Ling?

Born in Batu Pahat, Malaysia, Soh faces 188 charges ranging from market manipulation to deception to witness tampering. Quah, who came from a rich Penang family, was the former CEO of IPCO International (renamed Renaissance United in 2018) and faces 177 largely similar charges.

Soh and Quah are accused of allegedly manipulating the shares of Blumont Group, Asiasons Capital and LionGold Corp — collectively known as BAL — with help from a network of associates and brokers between 2012 and 2013. When BAL shares collapsed on Oct 4, 2013, some $8 billion in market value were destroyed. The case involves dozens of financial institutions both local and foreign, ranging from small brokerages to global banks. Since then, under new shareholders and management, Blumont has been renamed Southern Archipelago, Asiasons was first named Attilan Group before it was delisted while LionGold has been renamed Shen Yao Holdings.

The Sept 1, 2014, issue of The Edge Singapore reported Soh as a possible mastermind behind the scheme. While Soh had enjoyed some business success early on, he was bankrupt at the time the alleged offences were committed. Except for being an advisor to LionGold’s chairman, Soh was not holding any official positions in the three companies at that time. Neither was Soh’s name on any of the trading accounts allegedly used to trade the BAL shares. Quah, on the other hand, had 16 trading accounts under her name.

Investigations into the case started in 2014. Some 140 individuals were hauled up for questioning before investigators narrowed their focus to Soh and Quah. Soh was first mentioned by prosecutors as the possible mastermind in January 2016 when he applied to have his passport back to visit his mother back in Malaysia. He was rejected. They were formally charged on Nov 25, 2016, and Soh has been held in remand since. Quah, meanwhile, is out on bail for $4 million. Following a committal hearing in 2018, the trial started in March 2019. It lasted over 197 days till Dec 3, 2021, with the wrap-up of closing submissions.

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During the trial, nearly 100 witnesses were called and exhibits put forth as evidence ranged from emails, trading records, audio recordings, transcripts of mobile messages and spreadsheets containing details of cash inflow and outflow. Soh’s original defence team from WongPartnership, quit after representing him until the committal hearing, citing the discovery of a conflict. N Sreenivasan of K&L Gates Straits Law then took over. Quah’s lawyers from Harry Elias also resigned after she was not able to pay the fees and she was unrepresented at the later stages of the trial. The team of prosecutors included Teo Guan Siew, Jiang Ke-Yue, Nicholas Tan, Ng Jean Ting, David Koh and Esther Wong.

Prosecution: Soh and Quah built extensive share manipulation network

As DPP Teo had put it, the core of this case is about a network assembled over the years, controlled by Soh and Quah, to manipulate BAL shares. According to the prosecutors, the duo controlled at least 189 trading accounts with 20 brokerages and financial institutions which were opened using the names of 60 individual and corporate entities.

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This network of accounts included those opened under the names of Soh and Quah’s relatives, and business associates back in Malaysia, including some who sat on the boards of various other Singapore-listed companies. They included Richard Chan Sing En, described as Soh’s “blue-eyed boy” who controlled, managed and was a director of Singapore-listed companies Magnus Energy Group, Blumont and ITE Electric (renamed Sunrise Shares Holdings in 2017). There was also James Hong Gee Ho, who was an executive director of Blumont, and Peter Chen Hing Woon, LionGold’s former director of corporate and business development.

To help execute the trades, an “inner circle” group of brokers consisting of Ken Tai Chee Ming, Gabriel Gan Tze Wee and Henry Tjoa Sang Hi, dubbed by Soh as his “generals”, was recruited. There were many more brokers lower down the hierarchy who mainly dealt with Quah. Some of them were told to source for more nominee accounts so more “rolling” could take place before the settlement period was up. “It’s an entire infrastructure of numerous trading accounts set up to create a false market in BAL shares,” said DPP Teo in his closing.

According to the prosecution, between August 2013 and the end of September 2013 before the crash, the accounts allegedly controlled by Soh and Quah were holding 57% of all Asiasons shares, 77% of all Blumont shares and 61% of all LionGold shares. “The accused persons conspired to hide their control of BAL shares from the market and in so doing, prevented genuine market participants from making fully-informed decisions about these companies. Their extremely large undisclosed shareholdings contributed further to the false appearance as to the market for BAL shares,” said the prosecution.

Various witnesses revealed how Soh and Quah gave their trading instructions. These were made via phone calls, text messages, Blackberry messenger as well as face to face. The trades were mostly executed right away or as soon as practicable although there were standing orders too. Citing phone records between Soh and the brokers, the prosecution pointed out that more than four out of every five messages were from Soh, implying that Soh was actively, constantly contacting them instead of the brokers asking Soh for trading advice as claimed.

To cover their tracks when the overall market volume was too low, the brokers were told to break up the orders into different sizes and execute them over time. “The clear baseline undergirding the different modes of instruction-giving is that the instructions emanated from Soh and Quah as the ultimate decision-maker for the controlled accounts,” said the prosecution.

Prosecutors said there was no legitimate commercial reason for Soh and Quah to have traded BAL shares through multiple nominee accounts other than to create artificial liquidity to lure others to trade the shares.

By tightly controlling the shares, they were able to push the share prices up. The shares were then used, as in the case of LionGold, to fund a series of acquisitions to generate news flow and interest. “This, of course, also made them profits and served to avoid sustained contra losses that would otherwise cripple their scheme,” said the prosecution.

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Meanwhile, Soh wielded “substantial influence” over the corporate affairs of the three BAL companies. Soh was especially actively at LionGold. He helped look at potential M&A targets, attract new investors and stoke interest in the stock. At a later stage, he would also describe Blumont as the next Rio Tinto to a group of brokers invited to a presentation by him in late September 2013.

“The scheme was therefore designed to artificially grow the market for BAL shares and to enhance the perceived prospects of the companies. As this was being done, the size and value of the portfolio of BAL shares under Soh and Quah’s control also grew, such that they stood to gain significantly from the artificial inflation of the value of BAL shares,” said the prosecution.

In effect, the various actions, which included having control over the trading accounts and influence with the listed companies, were part of a “10-year infrastructure” endeavour Soh and Quah had built. Both Soh and Quah themselves had used the word “nominees” when describing some of the account holders, added the prosecution.

When the BAL stocks crashed spectacularly and the brokers were saddled with losses running into the millions, they told the court how Soh had assured them that he would help make good for the losses. At least in the initial stages, Soh did give them a few thousands intermittently to tide things over.

No logic, no answer

When the alleged share manipulation scheme was in progress, some of the accounts suffered from contra losses. Many of the witnesses testified how Soh and Quah would arrange for payment of contra losses, usually with cash top-ups to the accounts at the brokerages.

“The witnesses’ testimonies are mutually corroborative of one another in that they all point to the accused persons’ exercise of control over these nominee accounts in the names of others,” said Teo.

The records of these cash top-ups were kept by Goh Hin Calm, described by prosecutors as the “treasurer” of the entire operation. Goh was previously the interim CEO of IPCO, the listed company previously headed by Quah. Goh was originally charged together with Soh and Quah back in 2016 but he chose to plead guilty and has testified against them.

Other key witnesses included Soh’s old colleague Dick Gwee Yow Pin. In his testimony, Gwee told the court how Soh had piqued his interest in BAL stocks and as Gwee traded more actively, Soh got him to help coordinate the trades made by the likes of Gan, Tai and Tjoa. However, as investigators drew close after the crash, Soh asked Gwee to shoulder the blame. “I smiled, I shook my head and I walked away,” said Gwee.

According to DPP Teo, Soh’s response to many of the testimonies was basically a “flat denial” which ran counter to the entire weight of the evidence put before the court. “Effectively, (Soh) is asking … don’t believe anything they say, instead, prefer only my version of events,” says Teo. As for Quah, Teo noted she has chosen not to give the court her version of her events after she could not continue paying her lawyers.

“There’s simply no reason for so many witnesses to come to court to falsely implicate the accused persons in this way. It is not logical, and it’s also completely at odds with the objective evidence, which the accused persons simply had no answer to,” said DPP Teo.

Defence: Soh was the ‘easiest and most obvious’ scapegoat

Soh’s defence team was led by Sreenivasan, together with Jason Lim and Victoria Tan. The defence pointed out that during investigations, statements were taken from more than 140 individuals.

“Everyone gave their own self-serving version of events, portraying themselves as innocent bystanders or even victims until they were confronted with evidence to the contrary,” said the defence. Once that happened, many of them changed their testimonies and turned on Soh and Quah instead. “Those who admitted involvement to implicate the accused persons were not charged — a clear motivation to change their stories,” said the defence in its closing submissions.

“I have no idea why in the world the rogues want to fix me,” said Soh at one point in his examination. As for Quah, she claimed that her involvement in the saga is based on a conspiracy theory. “I’m not sure if it is the DPPs’ case that because of my relationship with John, I am a conspirator,” she told the court.

According to the defence, the BAL companies, especially LionGold, had genuine value and were not just empty, worthless shells whose share prices could easily be manipulated. And if there were times when the share prices did not reflect the true value, it was because of the very active buying and selling by others doing so on their own accord.

Between 2011 and 2013, the Singapore Exchange had organised 34 seminars promoting mining stocks, according to Soh. LionGold was held up as a poster boy, given how it was the first Singapore-listed gold miner in commercial production and not merely requiring funding for exploration.

As the defence had put it, LionGold, which used to be called The Think Environmental, was able to execute a string of acquisitions of other goldmines while attracting institutional investors such as Macquarie and Van Eck Associates to become substantial shareholders holding at least 5% of the shares each. Additional funding avenues were also lined up, such as a $200 million placement to Platinum Partners announced in August 2013 that would have valued LionGold at more than $1 billion although that deal eventually fell through.

Soh’s LionGold name card simply stated his designation as “advisor”. He held no other official titles in the company nor was there a contract stating how much he would be paid. Soh told the court that was because he had “innate confidence” that shareholders, directors and interested parties like Nik Ahmad Kamil, former Malaysian finance minister Abdul Daim bin Zainuddin and his son Md Wira Dani would reward him accordingly for his role as the “architect”.

“Isn’t it a bit naïve to just put in so much time and effort — actually dedicating two, three, four years to this — on the pious hope that people who make money will behave like gentlemen?” asked Sreenivasan in his examination. Soh agreed but added that was what made him a “compelling salesman.” “I believe in what I’m talking about. I believe in what I’m selling. There will always be people who don’t come true to form, so be it. But the ones who do come through more than make up for the ones who don’t. That has always been what guided me through my life. I’ve had reasons to regret many times but c’est la vie,” Soh told the court.

With Soh’s active involvement, LionGold saw takeover offers from the likes of China’s Citic. The stock was also included in certain indices between December 2011 and January 2012 which helped to boost trading interest and liquidity. “In any event, if there was a market manipulation conspiracy, the last thing that the conspirators would want is for the share to be an index stock and be subject to scrutiny and analyst reports,” argued the defence, which also added the LionGold’s share did not “look like that of a manipulated stock” as it was already near its all-time high by August 2012 and stayed “fairly stable” till August 2013.

For Blumont, the defence noted that Neo Kim Hock, then executive chairman, had wanted Soh to transform the company into a mining play, just as he did with LionGold. As the defence put it, Blumont brought in “industry legends” such as Ines Scotland, Robert Friedland and Alex Molyneux. This generated a “significant amount of enthusiasm in the market” as other investors bet on this team to turn another worthless shell into a “billion-dollar” company. “Certainly, (Soh) admitted that this was more of an aspirational value but such value is just as real in the market,” claimed the defence.

The third penny stock allegedly manipulated, Asiasons, was LionGold’s largest shareholder and while Soh was not involved in Asiasons, “it was only natural that Asiasons would be associated with Liongold and Blumont” and viewed positively as well”, according to the defence.

Blinkered approach

The defence also pointed out that the crash of Oct 4, 2013, happened just as LionGold was waiting for SGX to approve a share placement to Platinum Partner which would bring in more funds. As such, there was “no way” the two accused would have let the shares crash if they were manipulating the market as alleged. “The more likely scenario is that the accused persons did not control the market at all. The only winners were those who exited in time. Everyone else faced disastrous consequences,” argued the defence.

The defence noted the prosecution’s case was that Soh and Quah manipulated the shares until they were overvalued and then “somehow lost control”. The defence presented several possible reasons for the crash. For example, after the share price of Blumont had surged, SGX on Oct 1 asked the company if its share price at that level was justified instead of issuing the typical query asking the companies if they were aware of what might have caused the unusual movements in their share prices. “All witnesses agreed that this was an extremely unusual query that would certainly have a chilling effect on the price,” said the defence. The Securities Investors Association (Singapore) followed by calling for an investigation, which witnesses had agreed “could only worsen the situation”.

The actions of Goldman Sachs, while away from the public eye, were critical too, argued the defence. For some time, the US bank had extended margin financing totalling $69.36 million to Quah and $73.23 million to Hong, Blumont’s executive director.

At 8.30am on Oct 2, 2013, two days before the crash, the bank gave Quah and Hong till 1pm to pay up. “We needed to move the risk off the firm’s books and that we needed to be in a position to start selling the BAL shares if the account holders were not able to find alternative financing to repay the loans,” said Jason Moo, who, back in 2013, was Goldman’s head of the market solutions group and alternative capital markets within Goldman’s private wealth management unit in Asia.

The defence also pointed out that the credibility and motivation of witnesses called by the prosecution should be carefully examined. For one, as the trial went on, a “significant number” of prosecution witnesses gave evidence in court that materially differed from their investigative statements. “Witnesses’ evidence was inconsistent with each other and the prosecution impeached several of their own witnesses,” said the defence. Witnesses impeached included Blumont’s Hong and former LionGold CEO Nicholas Ng.

The defence argued that the prosecutors and investigators had “missed the woods for the trees”. When the “music stopped and shares crashed”, Soh was the “easiest and most obvious target” to pin the blame on. The authorities had taken a “blinkered approach”, painting Soh and Quah as masterminds of the scheme right from the start.

As described by Soh, he was a university dropout who enjoyed business success early on but suffered spectacular failures along the way. He made both friends and enemies. He was made bankrupt in 2002 but was determined to make a comeback by becoming actively involved in promoting and doing deals via LionGold.

Soh helped his network of investors, friends and family to set up accounts and assisted in account-related matters such as making payments. However, he did not control the trading of the accounts. Rather, he was giving advice, Soh told the court. “There was trading and accounts where others were controlling without even his knowledge. In the analysis of the evidence, it will be necessary to delineate what he did and what others did, to assess what he did and to form a view on whether what he did, on analysis makes out which charges, if any,” said the defence.

The defence argued that people around Soh saw opportunities and some took advantage of his connections to make money. “Others knew his cachet and knew that any company he was promoting would attract great interest. [Soh] welcomed some of these interactions but was kept in the dark when some of these greedy parties concocted independent schemes to manipulate BAL shares to make money at the expense of his family and friends,” the defence added.

The defence also singled out the so-called Manhattan House group, which was named after the location of the office where trading activities were carried out. This group was led by Soh’s friend Gwee and brokers Tai, Tjoa and Gan. Two other brokers, Leroy Lau and Wong Xue Yu, according to the defence, actively traded on their own accord as well. “Soh and Quah did not and could not have controlled these parties who had carried out the bulk of the trading activities in BAL shares without their knowledge,” said the defence. Lau, in particular, was known to be a day trader and market-maker behind the bulk of BAL’s trading volume and the defence argued that the prosecution ought to have examined the effect of Lau’s trades in the overall scheme of things.

While agreeing the saga might have been the most serious case of share manipulation in Singapore, the defence argued that the evidence did not show Soh and Quah as the real culprits responsible. “It would certainly be a violation of the fundamental sense of justice should [they] be convicted for the sins of others [who have not been charged to date],” said the defence. “Even after four years of investigations, a committal hearing and almost 200 days of trial, it is painfully apparent that the prosecution’s case is still unclear and plainly unsustainable.”