SINGAPORE: A well-known venture capitalist on Friday (Apr 4) described how he came to trust alleged fraudster Ng Yu Zhi enough to put millions into a nickel investment scheme said to be a massive fraud.
Dr Finian Tan said the trust he placed in Ng, 37, was in part because Ng himself had invested in Vickers Capital Group (VCG) - of which Dr Tan was chairman - and one of its funds.
Dr Tan is the founder and chairman of Vickers Venture Partners, a global venture capital firm wholly-owned by VCG.
"He invested in us with no requirement at all, he never said 'Oh I invest in you, can you invest in me?'
"He never solicited anything, he never asked me to invest, he just invested in us because he liked what we did," said Dr Tan during the second day of his testimony in Ng's trial.
Ng is contesting 42 charges: 15 counts of forgery, 14 counts of handling benefits from criminal conduct, 10 counts of cheating, two counts of fraudulent trading and one count of criminal breach of trust.
He is said to have duped 947 investors of almost S$1.5 billion (US$1.12 billion) through an elaborate scheme offering investors profits from the purported sale of physical nickel from 2016 to 2021.
Through his companies Envy Global Trading (EGT) and Envy Asset Management, Ng allegedly deceived investors that he was buying nickel at a discount and selling it for profit.
Prosecutors are saying that there was no underlying physical nickel trading activity, and investors were instead paid with money invested by other investors.
Dr Tan is said to be one of the victims who invested millions into Ng's scheme.
Even before entering the contract, Dr Tan said he had spoken to other investors about their experience and received positive feedback. These people told him that they could withdraw their money on time.
Dr Tan also described how he had connected with Ng socially, as both had met each other's wife and children, and visited each other's homes.
"And very often when I was with him, he was checking nickel prices," said Dr Tan, who described how Ng had even told him about a hurricane in Australia that purportedly occurred when his cargo was being loaded.
After the loading was completed, the two gave each other a "high-five", Dr Tan said.
"It was an amazing act, knowing what I know now. Obviously at the time I took everything as bona fide, but he gained a lot of my trust," said Dr Tan.
He repeated how Ng himself was an investor in VCG, but had never solicited for investments in return.
Dr Tan put a total of US$19.2 million into the nickel investment scheme over three contracts between October 2020 and January 2021.
He was promised returns of about 17 per cent for the first two contracts and about 15 per cent for the third. These contracts appeared "consistent" with what Ng had told him, with "nothing untoward", Dr Tan said.
"Everything checked out and it was nothing surprising. And don't forget he is also an investor of mine and he invested in the group, there was an element of trust," said Dr Tan.
The court heard previously that Ng had committed to investing US$5 million in a Vickers fund, and another US$24 million - comprising US$13 million from Ng and the rest from six others - into VCG.
Of the US$19.2 million that was invested into the nickel scheme, about US$15.5 million belonged to Dr Tan while a shareholder invested about US$2 million.
Vickers staff who learned about the scheme from Dr Tan invested US$1 million, and about US$500,000 came from other partners.
Subsequently, at Dr Tan's suggestion, two Vickers funds separately injected US$14.1 million into the nickel investment scheme through FinComm Group, an investment vehicle.
FinComm Group had two contracts with EGT in December 2020 and January 2021. These details form one of the charges against Ng.
Dr Tan was adamant that he would not have invested with EGT if the scheme lacked a supplier, buyers, or nickel.
"If there were any changes to the contract or deal in any shape or form, we must reassess (the risks and rewards to be had), however minute, and not having nickel at all is so major I can't even describe it," he said.
The scheme began unravelling at the start of 2021, around the same time Dr Tan discovered that one of the Envy entities had been placed on a "watchlist".
Even then, Ng gave the impression that the problem was simply a misunderstanding with the authorities, Dr Tan said. Singapore Police Force's Commercial Affairs Department (CAD) was investigating Ng by then.
Dr Tan himself was interviewed by the CAD in February 2021 and later sought to clarify the situation with Ng as he was in the dark about the precise nature of the problem.
He did not manage to speak to Ng, and was instead directed to a mass broadcast where Ng sought to alleviate investors' concerns.
Instead of gleaning any answers from this broadcast, Dr Tan said he only heard "the same old story" from Ng, who promised that their funds were safe.
Dr Tan then sought his own answers by speaking to others, including those in Ng's company. By then, Dr Tan heard plenty of rumours suggesting that Ng was money-laundering or that he was buying cryptocurrency.
By March 2021, Dr Tan got a whiff of a "serious stench of fraud", but still did not know the extent of the alleged hoax. He only learned about a possible Ponzi scheme later on.
Towards the end of Friday, the prosecution asked Dr Tan how the case had affected him and his company.
Dr Tan turned contemplative and gave his reflections while Ng, who was seated in the dock beside the witness, watched him intently.
Personally, he had lost "a lot of money", some of which came from his charity, Dr Tan said.
He added that fraud was the "worst type" of loss, in part due to the "reputational hit" to the company.
"We realised one thing, that we cannot beat a fraudster because the playing field is not a level field," he said. "No amount of due diligence can protect you."
He said there was a limit to how much checks fund managers could conduct.
"How do I know the ship is going to its destination, do I follow the ship? How do I know the ship is going to the buyer, how do I know that the money is going to the bank account?"
As a venture capitalist, Dr Tan said it was his "first exposure" to possible fraud, as he had always been able to see through those who sought to scam him.
"I admit that in this case, I was sold. He was skilful in what he did. I was a commodity trader for eight years ... and he could fool me because he knew all the jargon, he knew exactly what could possibly make this type of money."
In a brief show of emotion, Dr Tan said the incident was "very painful" as he trusted Ng.
"Until today I cannot balance the two, the Yu Zhi I knew, and what he is being accused of doing. I cannot connect the two people. Because the Yu Zhi I knew was very different from what he is said to have done. I can't quite comprehend."
The trial will resume on Tuesday with the defence cross-examining Dr Tan.
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Dr Finian Tan said the trust he placed in Ng, 37, was in part because Ng himself had invested in Vickers Capital Group (VCG) - of which Dr Tan was chairman - and one of its funds.
Dr Tan is the founder and chairman of Vickers Venture Partners, a global venture capital firm wholly-owned by VCG.
"He invested in us with no requirement at all, he never said 'Oh I invest in you, can you invest in me?'
"He never solicited anything, he never asked me to invest, he just invested in us because he liked what we did," said Dr Tan during the second day of his testimony in Ng's trial.
Ng is contesting 42 charges: 15 counts of forgery, 14 counts of handling benefits from criminal conduct, 10 counts of cheating, two counts of fraudulent trading and one count of criminal breach of trust.
He is said to have duped 947 investors of almost S$1.5 billion (US$1.12 billion) through an elaborate scheme offering investors profits from the purported sale of physical nickel from 2016 to 2021.
Through his companies Envy Global Trading (EGT) and Envy Asset Management, Ng allegedly deceived investors that he was buying nickel at a discount and selling it for profit.
Prosecutors are saying that there was no underlying physical nickel trading activity, and investors were instead paid with money invested by other investors.
Dr Tan is said to be one of the victims who invested millions into Ng's scheme.
NG'S "AMAZING ACT"
Even before entering the contract, Dr Tan said he had spoken to other investors about their experience and received positive feedback. These people told him that they could withdraw their money on time.
Dr Tan also described how he had connected with Ng socially, as both had met each other's wife and children, and visited each other's homes.
"And very often when I was with him, he was checking nickel prices," said Dr Tan, who described how Ng had even told him about a hurricane in Australia that purportedly occurred when his cargo was being loaded.
After the loading was completed, the two gave each other a "high-five", Dr Tan said.
"It was an amazing act, knowing what I know now. Obviously at the time I took everything as bona fide, but he gained a lot of my trust," said Dr Tan.
He repeated how Ng himself was an investor in VCG, but had never solicited for investments in return.
DR TAN'S CONTRACTS WITH EGT
Dr Tan put a total of US$19.2 million into the nickel investment scheme over three contracts between October 2020 and January 2021.
He was promised returns of about 17 per cent for the first two contracts and about 15 per cent for the third. These contracts appeared "consistent" with what Ng had told him, with "nothing untoward", Dr Tan said.
"Everything checked out and it was nothing surprising. And don't forget he is also an investor of mine and he invested in the group, there was an element of trust," said Dr Tan.
The court heard previously that Ng had committed to investing US$5 million in a Vickers fund, and another US$24 million - comprising US$13 million from Ng and the rest from six others - into VCG.
Of the US$19.2 million that was invested into the nickel scheme, about US$15.5 million belonged to Dr Tan while a shareholder invested about US$2 million.
Vickers staff who learned about the scheme from Dr Tan invested US$1 million, and about US$500,000 came from other partners.
Subsequently, at Dr Tan's suggestion, two Vickers funds separately injected US$14.1 million into the nickel investment scheme through FinComm Group, an investment vehicle.
FinComm Group had two contracts with EGT in December 2020 and January 2021. These details form one of the charges against Ng.
Dr Tan was adamant that he would not have invested with EGT if the scheme lacked a supplier, buyers, or nickel.
"If there were any changes to the contract or deal in any shape or form, we must reassess (the risks and rewards to be had), however minute, and not having nickel at all is so major I can't even describe it," he said.
Related:
IMPACT OF THE ALLEGED FRAUD
The scheme began unravelling at the start of 2021, around the same time Dr Tan discovered that one of the Envy entities had been placed on a "watchlist".
Even then, Ng gave the impression that the problem was simply a misunderstanding with the authorities, Dr Tan said. Singapore Police Force's Commercial Affairs Department (CAD) was investigating Ng by then.
Dr Tan himself was interviewed by the CAD in February 2021 and later sought to clarify the situation with Ng as he was in the dark about the precise nature of the problem.
He did not manage to speak to Ng, and was instead directed to a mass broadcast where Ng sought to alleviate investors' concerns.
Instead of gleaning any answers from this broadcast, Dr Tan said he only heard "the same old story" from Ng, who promised that their funds were safe.
Dr Tan then sought his own answers by speaking to others, including those in Ng's company. By then, Dr Tan heard plenty of rumours suggesting that Ng was money-laundering or that he was buying cryptocurrency.
By March 2021, Dr Tan got a whiff of a "serious stench of fraud", but still did not know the extent of the alleged hoax. He only learned about a possible Ponzi scheme later on.
"I WAS SOLD": DR TAN
Towards the end of Friday, the prosecution asked Dr Tan how the case had affected him and his company.
Dr Tan turned contemplative and gave his reflections while Ng, who was seated in the dock beside the witness, watched him intently.
Personally, he had lost "a lot of money", some of which came from his charity, Dr Tan said.
He added that fraud was the "worst type" of loss, in part due to the "reputational hit" to the company.
"We realised one thing, that we cannot beat a fraudster because the playing field is not a level field," he said. "No amount of due diligence can protect you."
He said there was a limit to how much checks fund managers could conduct.
"How do I know the ship is going to its destination, do I follow the ship? How do I know the ship is going to the buyer, how do I know that the money is going to the bank account?"
As a venture capitalist, Dr Tan said it was his "first exposure" to possible fraud, as he had always been able to see through those who sought to scam him.
"I admit that in this case, I was sold. He was skilful in what he did. I was a commodity trader for eight years ... and he could fool me because he knew all the jargon, he knew exactly what could possibly make this type of money."
In a brief show of emotion, Dr Tan said the incident was "very painful" as he trusted Ng.
"Until today I cannot balance the two, the Yu Zhi I knew, and what he is being accused of doing. I cannot connect the two people. Because the Yu Zhi I knew was very different from what he is said to have done. I can't quite comprehend."
The trial will resume on Tuesday with the defence cross-examining Dr Tan.
Continue reading...