The former Head of Transactions at Genneva Pte Ltd (“Genneva”), Lim Hong Boon (“Lim”), was convicted after trial and sentenced by the State Courts to 60 months’ imprisonment on one count of fraudulent trading under Section 340(5) of the Companies Act.
Genneva is a Singapore-registered company that sold gold bars under a buyback scheme between 2008 and 2012. Under the scheme, the company sold gold bars to customers with promised returns of up to 36% per annum over a contract period.
In August 2012, Genneva implemented a “Gold Inspection” exercise, where customers were required to hand their gold bars to Genneva when renewing their contracts. This exercise was purportedly conducted for the purpose of ascertaining the authenticity and purity of the customers’ gold. Customers were told that Genneva would return an equivalent quantity of gold to them after three working days. Customers could not renew their contracts unless they handed over their gold bars to Genneva. At the time when the “Gold Inspection” exercise was implemented, Genneva was already facing financial difficulties, due to the returns promised to customers as well as the obligation to buy back the gold bars sold to customers.
Approximately 3,500 kg of gold was collected by Genneva in the two months of the “Gold Inspection” exercise. Genneva did not conduct any test to ascertain the purity of the gold bars collected. Instead, the gold bars were sold, pawned or ‘returned’ to customers who had earlier handed over their gold as part of the “Gold Inspection” exercise.
As the collection of gold bars for the “Gold Inspection” exercise slowed down in September 2012, Genneva ran out of gold bars to return to its customers who had earlier handed over their gold bars to Genneva. As of 30 September 2012, when Genneva ceased business operations, it owed approximately 640 kg of gold to its customers.
Lim was the Head of Transactions at Genneva during the material period,and was overseeing the collection and disposition of gold in the “Gold Inspection” exercise when he knew that Genneva was in poor financial condition and did not have any reasonable expectation of being able to return the gold collected from customers within the stipulated timeframe. This formed the basis of the charge of fraudulent trading against him, for knowingly being a party to the carrying on of Genneva’s business in incurring debts (in the form of gold bars) to its customers when there was a substantial risk of them not getting their gold bars back.
Lim’s conviction follows the earlier conviction of Kwok Fong Loong (“Kwok”) on 30 July 2020. Kwok was the former General Manager at Genneva and was also charged with one count of fraudulent trading under Section 340(5) of the Companies Act. He had pleaded guilty and was sentenced to 56 months’ imprisonment.
The offence of fraudulent trading under Section 340(5) of the Companies Act carries an imprisonment term of up to seven years, or fine not exceeding $15,000, or both.
SINGAPORE POLICE FORCE
04 March 2022 @ 2:10 PM