30/06/2021
🇸🇬📰𝐍𝐨𝐭𝐡𝐢𝐧𝐠 𝐢𝐦𝐩𝐫𝐨𝐩𝐞𝐫 𝐚𝐛𝐨𝐮𝐭 𝐠𝐢𝐯𝐢𝐧𝐠 𝐟𝐮𝐫𝐧𝐢𝐭𝐮𝐫𝐞 𝐫𝐞𝐛𝐚𝐭𝐞𝐬, 𝐬𝐚𝐲𝐬 𝐝𝐞𝐟𝐞𝐧𝐜𝐞
7 June 2021 (Source: Law Watch)
The suit centres on claims by UOB that Lippo Marina Collection, a subsidiary of Indonesia's Lippo Group, conspired with property agents and buyers to inflate about $182 million of home loans.
A bitter legal battle between an Indonesian developer and United Overseas Bank (UOB) over claims that a conspiracy was hatched among buyers of units on Sentosa to inflate about $182 million of home loans is nearing its final act.
The suit filed by UOB against Lippo Marina Collection (LMC) and the two agents wrapped up last month after a 10-day trial with the High Court set to deliver its verdict this month.
It centres on claims by UOB that LMC, a subsidiary of Indonesia's Lippo Group, conspired with property agents and buyers to inflate about $182 million of home loans.
The court heard that LMC gave substantial "furniture rebates" of 22 per cent to 34 per cent that were used to offset cash payments required for the condo purchases.
This inflated the price of individual properties in Option to Purchase forms by the amounts of the furniture rebate.
This in turn led UOB to finance the units in excess of the purchase prices and extend loans beyond limits permitted by the Monetary Authority of Singapore (MAS).
Banks can lend only up to 80 per cent of the purchase price (or current market valuation, whichever is lower) of a residential property, less any discount, rebate or benefit.
LMC has denied being involved in any conspiracy or liable for the losses claimed by UOB.
Senior counsel Siraj Omar of Drew & Napier said in his closing submissions for LMC: "UOB is the victim of its poor internal system of checks" that allowed itself to be manipulated by property agents Rick Goh and Aurellia Ho and Ms Ann Ong, who was a UOB staff member handling the loan applications.
"Unfortunately, the risk of default came true in this case at a time when a dampened property market meant that UOB could not recover the amounts owing on the loans by simply enforcing the mortgage and selling the properties," said Mr Siraj.
UOB disbursed more than $181 million in mortgages to purported purchasers of 38 units in the Marina Collection - a Sentosa Cove condominium developed and sold by LMC - between December 2011 and September 2013.
By April 2015, all 38 buyers had defaulted on their loans.
UOB's lawyer, Mr Eddee Ng of Tan Kok Quan Partnership, said in his closing submissions that the bank had been a victim of the fraudulent acts by the defendants.
This meant LMC was able to dispose of the units with the true purchase prices being fully financed by UOB and to put surplus money into the accounts of the purchasers, who were fronts with limited financial means, said Mr Ng.
As a result, UOB suffered losses and damage, he added.
The Marina Collection was launched for sale in late 2007 but only 42 of its 124 units had been sold by March 10, 2011.
Mr Ng said sales suffered after property cooling measures were imposed in 2009.
It was against this backdrop that LMC hatched a "conspiracy" with Mr Goh and Ms Ho to dispose of its unsold units in Marina Collection.
In December 2011, Ms Woo Pui Lim, LMC's general manager at the time, spoke with Mr Goh and the developer agreed to grant furniture rebates to purchasers for an amount that would cover all the cash components buyers must pay before completing a sale.
The buyers could use the rebates to offset these amounts and other expenses.
Any surplus payments LMC received from UOB would be paid into the buyers' accounts upon completion of the sale.
As the furniture rebates were not disclosed to UOB, the bank ended up financing the full purchase price of 38 condo units, said Mr Ng, who pointed to four acts of deceit allegedly carried out as part of the conspiracy.
Besides the alleged concealing of the furniture rebates, Mr Ng said the defendants also concealed the true identities of the purchasers.
It was later revealed that 32 of the 38 purchasers were nominees or fronts for four investors based in Indonesia. Only six were the intended beneficial owners of the units.
It also allegedly tricked UOB into believing that these buyers had the means to meet the mortgage repayments by moving sums ranging from $200,000 to $1.2 million between the buyers' UOB accounts at the time of their loan applications.
These apparent assets allowed UOB to give the green light to approve the loans.
The fourth alleged act of deceit was payment misrepresentations made by LMC through letters from its solicitors at TSMP Law Corporation to PKWA Law Practice LLC, which acted for both UOB and the purchasers.
These letters claimed that LMC had received payment of the 15 or 25 per cent of the purchase price that had to be paid before the sale could be completed.
In fact, no such payments were made as the amounts had already been set off against the furniture rebates.
Mr Ng said UOB had relied on the payment letters in disbursing the loans.
He also said the defendants unlawfully conspired to cause loss to UOB.
Mr Siraj argued that UOB did not rely on payment misrepresentations by LMC in deciding to disburse the loans, but on the confirmation provided by its own lawyers from PKWA.
LMC denied being involved in any conspiracy and said the furniture rebate agreement was not intended to cause UOB harm.
Mr Siraj said furniture rebates were a common marketing tool employed by many developers while LMC was under no obligation to declare the rebates to UOB or any other party.
The obligation to disclose was on the party seeking financing - the purchasers of the property.
Mr Siraj pointed out that Mr Goh and Ms Ho did have a "wider plan", but LMC was not a party to it.
This was "to acquire the units with minimal cash outlay, hold them for as long as possible and then sell them for a profit".
To achieve this, it was of fundamental importance that the buyers avoided a situation where UOB enforced its rights as mortgagee to repossess the properties, said Mr Siraj.
"The truth is that LMC had nothing to do with the purchasers' applications for the loans or UOB's decision to approve them. It simply granted furniture rebates to the purchasers," said Mr Siraj.
UOB had made a deal with Mr Goh and Ms Ho that it will not enforce any judgment obtained against them in exchange for Mr Goh's "truthful testimony" in court.
4 𝙖𝙡𝙡𝙚𝙜𝙚𝙙 𝙖𝙘𝙩𝙨 𝙤𝙛 𝙙𝙚𝙘𝙚𝙞𝙩
UOB's lawyer Eddee Ng of Tan Kok Quan Partnership pointed to four acts of deceit allegedly carried out as part of the conspiracy:
𝟭. 𝗣𝗨𝗥𝗖𝗛𝗔𝗦𝗘 𝗣𝗥𝗜𝗖𝗘 𝗠𝗜𝗦𝗥𝗘𝗣𝗥𝗘𝗦𝗘𝗡𝗧𝗔𝗧𝗜𝗢𝗡𝗦
UOB said the second and third defendants - Mr Rick Goh and Ms Aurellia Ho - had failed to declare furniture rebates in housing loan applications for all 38 units. Although the purchasers' names appeared on the applications, it was in fact Mr Goh and Ms Ho who took charge of buying the units as the purported buyers were acting as fronts for the purchases.
LMC said this had nothing to do with the developer. It added that Mr Goh and Ms Ho had stated unequivocally that UOB's Ann Ong knew of the furniture rebates but she failed to declare them in the loan application forms that she filled in for the various purchasers.
𝟮. 𝗜𝗗𝗘𝗡𝗧𝗜𝗧𝗬 𝗠𝗜𝗦𝗥𝗘𝗣𝗥𝗘𝗦𝗘𝗡𝗧𝗔𝗧𝗜𝗢𝗡𝗦
UOB said it was led to believe that the purchasers were the true beneficial owners of the units and that they were applying for housing loans to buy the properties for their own use. In reality, 32 of the 38 purchasers were nominees or fronts for four investors based in Indonesia.
LMC said that even if it accepts UOB's case that it had been unaware that some of the purchasers were nominees, the fact remains that the bank made the decision to extend the loans to these individuals after conducting its own credit checks on them.
𝟯. 𝗙𝗜𝗡𝗔𝗡𝗖𝗜𝗔𝗟 𝗦𝗧𝗔𝗡𝗗𝗜𝗡𝗚 𝗙𝗥𝗔𝗨𝗗
UOB said sums ranging from $200,000 to $1.2 million were round-tripped between the UOB accounts of the buyers as assets under management at the time of their loan applications. Having such assets was one of the criteria for the loans to be approved.
LMC said this had nothing to do with the developer. It added that Mr Goh and Ms Ho had said the funds were moved under instructions from ex-UOB staff Ms Ong.
𝟰. 𝗣𝗔𝗬𝗠𝗘𝗡𝗧 𝗠𝗜𝗦𝗥𝗘𝗣𝗥𝗘𝗦𝗘𝗡𝗧𝗔𝗧𝗜𝗢𝗡𝗦
UOB said LMC's lawyers told its lawyers that they had received cheques or direct payment from buyers to complete the deals. In fact, no such payments were made as the funds had already been set off against the furniture rebates. UOB had relied on the payment misrepresentations in disbursing the loans.
LMC said UOB did not rely on payment misrepresentations by LMC in deciding to disburse the loans.
It said UOB's own lawyers had confirmed that the borrowers had paid the cash or cheques to LMC prior to the completion of the deals. This information was filled in a document known as Form 3 that had to be filled in by UOB lawyers before the loans could be disbursed.
https://www.singaporelawwatch.sg/Headlines/nothing-improper-about-giving-furniture-rebates-says-defence
Marina Collection•Cove Drive•Sentosa Cove•Singapore Condominium
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