Singapore court rules son of ex-PM Goh Chok Tong caused US$146 million in losses to company
- A judge said Goh Jin Hian failed to spot three ‘red flags’ that should have triggered his inquiry into the financial position of now-insolvent marine fuel supplying firm IPP
- Goh argued there was no breach, no loss caused and claimed relief from liability under the Companies Act
Goh Jin Hian has been found liable for S$196 million (US$146 million) in losses as director of now-insolvent marine fuel supplying company Inter-Pacific Petroleum (IPP).
In brief remarks obtained by CNA on Tuesday, Justice Aedit Abdullah ruled in favour of IPP, which had sued Goh, who is the son of former Singapore prime minister Goh Chok Tong, for breaching his director’s duty.
IPP’s claim was that Goh, 55, had failed to look into certain issues which would have led him to realise that the company was being defrauded.
In his defence, Goh claimed that there was no breach, no loss caused and he claimed relief from liability under the Companies Act.
In his brief remarks issued on January 24, ahead of a full judgment that has yet to be released, Justice Abdullah said Goh had an obligation to oversee the affairs of the company as a director.
“The obligation is to monitor the affairs of the corporation,” he said. “This entails, among others, at least broad level supervision of the activities of the officers of the corporation, for the protection of the company, shareholders and creditors.”
The judge said the evidence showed that Goh played an active role in the management of the company and had assumed responsibilities, and obtained knowledge and information.
While Justice Abdullah said a director need not know all details, the evidence showed a lack of knowledge by Goh about IPP’s cargo trading business, which was a significant portion of the company’s activity.
There were three “red flags” that should have triggered Goh’s inquiry into the financial position of the company, said the judge. About US$132 million was owed to the company, its bunker licence got suspended, posing a threat to its profitability, and large sums totalling about US$15.6 million were owed to Maybank while the licence was suspended.
“The financial position of the company was suspect, and should have primed the defendant to look further and obtain a picture of the true state of the affairs of the company and monitor what was happening within it. That was his duty as a director,” said Justice Abdullah.
He said if Goh had performed his duties, transactions and drawdowns that caused loss to the company would not have been carried out.
While Goh pointed to certain information within the company to say there was enough basis to be satisfied or not probe further, the judge rejected this.
“An honest and reasonably diligent director would have persisted and probed further,” he said.
Goh also argued that the banks had breached their duties to the company, but the judge found this “speculative” and a separate issue from Goh’s liability.
The judge found that relief under the Companies Act was not applicable to Goh, as that provision requires that the court finds the person had acted “honestly and reasonably”.
“At the very least, the circumstances precluded the conclusion that the defendant had acted reasonably,” said Justice Abdullah.
He allowed the full extent of losses claimed by the company, measuring the breach from February 7, 2018 and encompassing the whole amount of the drawdowns during June to July 2019, for a total of US$146,047,099.60, and the relevant interest claimed.
A further hearing will be fixed for further directions such as submissions on costs.
Other than this civil suit, Goh is embroiled in a criminal case before the courts.
At his last pre-trial conference on February 2, Goh indicated that he was not guilty. His next pre-trial conference is in March.