China Sky's ex-CEO may face contempt of court charges

SINGAPORE - The former chief executive of China Sky Chemical Fibre could face contempt of court charges after he failed to show up at a hearing on Tuesday concerning funds frozen in a bank account.

Mr Huang Zhong Xuan, who also missed an April court date last year, had not informed the court that he would not appear.

His legal representatives told High Court Justice Belinda Ang on Tuesday that Mr Huang had been advised not to travel from China after undergoing a medical examination.

Another defence witness, Mr Sunny Hui, who was formerly China Sky's group financial controller, failed to turn up as well.

Lawyer Philip Fong, of Harry Elias Partnership, said Mr Hui said he was "not a party to the proceedings and had more important matters to attend to".

Senior Counsel Cavinder Bull of Drew & Napier, who is the lead lawyer of the plaintiff, the Monetary Authority of Singapore (MAS), said their absence showed "disobedience of a court order" and may amount to a criminal offence.

The hearing centres on US$3.7 million (S$4.7 million) that has been frozen in a Credit Suisse bank account since March 28 last year. The MAS won an initial interim order to freeze the cash and wants a High Court extension.

Ownership of the funds is a key aspect of the dispute.

They are in an account in the name of Build Up International Investments, a firm registered in the British Virgin Islands. Build Up is the second defendant in the dispute alongside Mr Huang.

Build Up and Mr Huang both claim that the bank account does not belong to Mr Huang. They also assert that Mr Huang does not own Build Up so the funds should not be frozen.

Mr Huang has said that the dispute was between the MAS and Build Up, which has only two registered shareholders - Mr Lau Kam Sze and Mr Huang's daughter Yiling.

The case had been adjourned last April as Mr Huang was absent and not represented due to delays in serving him court papers in China.

China Sky and its directors have been under investigation by the Commercial Affairs Department (CAD) since February last year for possible breaches of the Securities and Futures Act.

Mr Huang was CEO when the offences may have occurred.

The MAS said the funds in the account could be used to meet any liabilities if the ongoing CAD probe shows that offences had been committed.

A month after Mr Huang's sudden resignation as CEO, he transferred about US$10 million out of the account, on March 5 last year. On March 27, he instructed Credit Suisse to move the remaining US$3.7 million.

Mr Huang's lawyers told the court on Tuesday that Ms Lillian Liao, a relationship manager with Credit Suisse for the Build Up account, had lied in her affidavits about how the bank account came to be set up and about her preparation of the documents which purportedly show that Mr Huang is its beneficial owner.

They also said the funds belonged to Mr Lau.

Senior Counsel Goh Phai Cheng, who is representing Build Up's Mr Lau and Ms Huang, said a key document - the declaration of beneficial ownership - stating that his clients held shares in Build Up as Mr Huang's nominees had not been signed by them.

Mr Goh alleged that his clients' signatures were forged. Ms Liao told the court that no forgery had taken place and that she had personally witnessed Mr Huang signing the document, which contains the signatures of all three persons.

The case is scheduled to run until Friday.

rjscully@sph.com.sg

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