The High Court ordered a company director to be jailed three months for contempt of court after he failed to account for some US$10.14 million (S$14.3 million) withdrawn from his company's bank account, which is at the centre of an assets freeze order.
The court rejected Vintech founder Vincent Gan's explanation that monies were withdrawn in cash to pay for the supply of plastic goods he sold to Japanese conglomerate Toyota Tsusho (Malaysia).
Senior Judge Lai Siu Chiu, in judgment grounds issued earlier this month, found that Gan's refusal to disclose the whereabouts of the monies was meant to frustrate any attempts by Toyota to trace and recover it.
Toyota is a Malaysian subsidiary of Japan's Toyota Tsusho Corporation, an international trading house involved in products such as cars, plastics and chemicals.
Toyota sued Mr Henry Foo, former senior manager of its Johor Baru office, together with three Singapore companies, including Vintech Engineering, which purportedly supplied engineering plastics to the company.
Toyota sought to recover RM82.26 million alleging all four conspired to defraud the firm through a series of fictitious transactions involving the sale of engineering plastics.
In the run-up to the case, Toyota obtained a freeze order for RM28.18 million against Vintech in July 2015 and a separate freeze and disclosure order against Gan personally the following month.
Gan then filed an affidavit disclosing the assets and means of Vintech but lawyers Keith Han and Elsa Goh argued for Toyota that he had failed to account for the US$10.14 million withdrawn from Vintech's bank account between 2014 and 2015.
Toyota then applied for Gan to be committed for contempt of court, which the court granted after considering the evidence, but gave him 10 days' grace to comply.
Gan's affidavit filed on Dec 1 last year, was essentially a " rehash" of a similar affidavit filed in August 2015, where he said he had complied with the requirements, said Judge Lai.
His lawyers Kirpal Singh and Osborne Oh argued he had complied with the order as the money had been dispersed in the 17 months up to May 2015, well before the freeze was ordered on July 27, 2015, and it was no longer an asset by then.
But the judge was not convinced about Gan's credibility.
"If the court accepts Gan's argument, it means that so long as sums of money that were previously held in the bank account of a defendant had been withdrawn and spirited elsewhere before an injunction or freezing order was imposed, there is no obligation on the defendant to account for the whereabouts of the sums that had been disposed of.
"That cannot be right and would defeat the very purpose of a tracing remedy," said Judge Lai.
Gan's three-month jail term for court contempt was stayed pending further appeal.
This article was first published on Feb 28, 2017.
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