Former Sakae Holdings Director on Trial for S$15 Million

On Monday (Mar 13), former Sakae Holdings director Ong Siew Kwee was brought to court for allegedly misappropriating S$15 million from an associate company. He was charged with criminal breach of trust, aiding forgery and providing false evidence in the High Court.

Ong was accused of misappropriating money through his involvement with Sakae Holdings' associate firm Gryphon Capital Management, which manages GREIH. Furthermore, he lied about his income and assets.

Ong Siew Kwee’s trial begins

Today, Andy Ong Siew Kwee, 52 years old and former Sakae Holdings director is facing trial for allegedly misappropriating S$15.8 million from a joint venture. Ong is accused of breaching trust by failing to safeguard Sakae funds and forgerying a lease agreement.

Sakae Holdings Ltd, owner of Sakae Sushi chain restaurants, recently revealed financial irregularities at Griffin Real Estate Investment Holdings (Griffin), an associate company managed by Mr Ong. According to a filing with the Singapore Exchange yesterday, they had recommended Mr Ong's resignation due to his involvement in "various undisclosed irregular financial transactions involving (Griffin)" that may violate Companies Act regulations.

Sakae had also filed a written complaint to the Commercial Affairs Department about these suspicious transactions and received an anonymous report on Griffin from an accounting firm commissioned by the company. This report detailed multiple instances where Ong had authorized or agreed to make payments to companies which are majority-owned or controlled by him.

Ong is the CEO of ERC International, a training company; and ERC Unicampus, which provides higher education services to international students. Furthermore, Ong manages ERC Holdings which operates several businesses related to education and property investments, according to their website.

Ong, who serves as managing director and CEO of ERC Holdings, previously held a non-executive directorship at Sakae Holdings and owned a controlling stake in Griffin Real Estate since September 2010.

Ong is accused of misappropriating funds while he was the sole shareholder of Gryphon Capital Management, an associate of Sakae Holdings that was involved in the joint venture with Sakae and had acquired some stake in Griffin. On September 12, 2012, Ong transferred the money from Gryphon to ERC - a firm he also managed.

Sakae is seeking to remove Ong's directorship and disqualify him from holding any public office. Furthermore, the company wants Ong's two co-accused Ho Yew Kong and Chua Wei Tat barred from holding any public office as well.

Prosecutors’ opening statement

Trials are legal proceedings in which one side (the prosecution) attempts to prove that the other party (defense) committed a crime. During trial, both sides have an opportunity to present their cases before a jury, who then must determine whether or not the defendant is guilty of the offense.

In order to adequately explain their case, both sides must present witnesses and evidence. This is known as "summation."

The opening statement is an essential component of a trial, providing jurors with an outline for what to expect during the proceeding. This is accomplished by outlining evidence that will be presented and outlining key facts.

An attorney's opening statement should be objective and free from any information that might influence the jury's verdict. Furthermore, it must clearly outline what evidence will be presented by the defense and why it is pertinent to this case.

Attorneys who make statements that cannot be proven or are based on something difficult to establish can be held accountable for professional misconduct and it's also unfair to the opposing party if such conduct takes place.

Particularly if the prosecutor is an experienced advocate such as a senior judge or criminal prosecutor. It would not be fair to an accused party for such an advocate to present an opening statement that could potentially influence the jury's verdict.

The prosecutor must also prepare for cross examination, in which the defense attorney asks questions to a witness in an effort to cast doubt upon their credibility. It's essential that you prepare ahead of time since this can take anywhere from several hours up to a full day.

Ong’s defence

Ong's defense was that he and ERC Holdings directors Stephen Tan and Chia Puay Khiang had acted in good faith when voting to issue shares. This wasn't done for their personal gain or to influence ERCP II shareholders; rather, it was done so they could continue to exercise unrestricted powers to issue new shares without seeking shareholder approval.

On this basis, the CA held that Ong HB's conduct did not amount to a serious breach in corporate behavior which would merit disqualification under Section 216 of the Companies Act. Furthermore, there was no evidence of fraud on behalf of the minority which would warrant disqualification under Section 216.

Nevertheless, the CA found that Ong HB's conduct did lead to a justified loss of confidence in Foo's management of ERCP II. This conclusion was supported by his reckless actions and failure to disclose them fully to shareholders until approximately one year after they occurred.

The CA also found that Ong HB had not acted in good faith when, in 2013, he participated in voting to approve a share option and issuance in ERCU for ERCP II's benefit. This vote resulted in dilutive effects to ERCP II's shareholding in ERCU, leading to substantial growth of GREIC's stake therein.

In addition, the CA held that Ong HB's misconduct had contributed to a justifiable lack of trust in both directors of GREIC and GREIC Holdings. This was because directors from GREIC - who also served on GREIH's board - had material influence over its liquidation process. Furthermore, the directors of GREIC had acted in bad faith by refusing to collect debt owed by GREIH even after knowing about Ong HB and Andy Ong's mishandling of funds at GREIC.

Judge’s verdict

Ong's trial began on March 13 of this year, more than four and a half years after he was charged with crimes totalling S$25 million. In addition to one charge of criminal breach of trust, he faces additional allegations of aiding in the forgery of a lease agreement and giving false evidence in the High Court.

In a lawsuit brought against Sakae Holdings and Gryphon Real Estate Investment Corporation Pte Ltd (collectively "the Sakae cases"), it was discovered that Andy Ong, as director of both GREIC and Gryphon Real Estate Investment Holdings Pte Ltd ("GREIH"), diverted funds to entities related to him or his family members through seven transactions which were uncovered by the company.

According to the CA's judgment, Ong HB's adverse findings in the Sakae cases constituted a legitimate basis for GREIC shareholders to lose confidence. This was because their directors had engaged in oppressive conduct against Sakae and other GREIH shareholders through actions such as borrowing money from ERC Holdings to cover legal costs associated with those cases.

Later, Ong resigned his role as director of GREIC and GREIH, leading to the company being placed under court-appointed liquidators. Furthermore, the CA found that Ong HB had engaged in oppressive conduct against Sakae by diverting funds to entities related to him or linked to his family members.

This was in violation of s 157 of the Companies Act, which forbids diversion of money to an entity which is not an employee or agent of the company. As a result, the company must make full restitution and report any theft to relevant authorities.

After admitting his guilt to criminal breach of trust, the accused was sentenced to five years' imprisonment and a mandatory minimum punishment of 12 strokes of the cane. Furthermore, an amount commensurate with the seriousness of the offense was ordered as compensation - amounting to an amount that reflected both his criminal breach of trust guilt.