Former PM’s Son Sued Over S$212.6 Million Losses Due to Alleged Breach of Directors’ Duties

By
Shawn Ambrose
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Dr Goh Jin Hian, son of former prime minister Goh Chok Tong, hit the headlines a few day ago, and it wasn’t because he was planning to follow his father’s footsteps and enter politics.

Goh had his passport seized by the Commercial Affairs Department (CAD) as part of investigations into the New Silkroutes Group for alleged false trading and market rigging.

Goh, who is the executive director and CEO of New Silkroutes Group, is assisting with CAD’s investigations.

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It seems like the controversy surrounding the former PM’s son has only just begun, however.

Former PM’s Son Sued Over S$212.6 Million Losses Due to Alleged Breach of Directors’ Duties

Last Friday (2 Oct), the 52-year-old was sued by marine fuels supplier Inter-Pacific Petroleum (IPP) over $212.6 million in losses it incurred.

Goh, who was the firm’s former director, is alleged to have breached his duties, according to The Straits Times.

The lawsuit was filed by IPP’s judicial managers – Deloitte & Touche – who intend to recover the hundreds of millions lost from Goh, including additional interest.

Soon after news of the suit emerged, Goh stepped down as chairman of Cordlife Group, a cord blood banking firm.

So, what did he do?

Failed to Discover Sham or Non-Existent Transactions

IPP’s judicial manages have accused Goh, who was director of the company from 2011 to Aug last year, of “breaching his duty to act with due care, skill and diligence”.

According to his accusers, Goh failed to ensure that IPP’s affairs were “properly administered and that its assets and property are not dissipated”.

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Specifically, they discovered in 2017 that there were significant outstanding accounting receivables due from its customers.

However, investigations revealed that these outstanding receivables were derived from non-existent or sham transactions.

In other words, their customers did not actually owe the company anything.

In fact, when IPP probed the matter further, they found out that their balance-sheet was insolvent by around June 2019, meaning the value of the company’s assets was less than the amount of its liabilities.

IPP’s judicial managers wondered why Goh didn’t uncover these inconsistences or bring them to light back in 2017, considering he was still director at the time.

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So, in essence, they had two problems with Goh’s handling of the situation:

  • That he failed to look into the unusually high amount of outstanding receivables in 2017
  • That he failed to investigate why they remained uncollected in 2019

If he had carried out the necessary investigations, the suit said, he would have learned that those receivables came from sham transactions.

Goh’s Response

Goh, however, believes it was beyond the duties of a director to uncover these inconsistencies.

Speaking to ST, he said he was “surprised that the judicial managers have commenced an action so unilaterally” without asking him for an explanation first.

“I have raised various queries and concerns to the JMs: How the banks could have let the debt build-up to US$160 million when this was meant to be back-to-back financing or very short term loans? Have the JMs challenged the bank’s entitlement to this payment?

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“What did the banks who are experts in trade financing miss that I should have picked up? What should I have done as a director that I did not do?” he asked.

2020 has not been a good year for anyone, but it looks to be a particularly bad one for Goh.

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Shawn Ambrose
Email: [email protected]