SINGAPORE: Allied Technologies will file a police report over an unauthorised payout of S$33 million from its escrow account on the instructions of a lawyer who has since gone missing, the precision engineering firm said in a Singapore Exchange (SGX) filing on Thursday (May 23).
The escrow account was held by law firm JLC Advisors, who wrote to Allied Tech on Wednesday that it has reasons to believe that the payout, instructed by managing director Jeffrey Ong, “might have been unauthorised”.
According to Allied Tech, the law firm said it is investigating the matter and has lodged reports with the authorities.
The engineering company also said it plans to file a report with the Law Society of Singapore and start legal proceedings.
Based on the SGX filing, the Law Society of Singapore issued a notice of intervention on Wednesday into JLC’s client accounts. It requested that law firms with pending matters relating to client accounts of JLC disclose these details, including the amount of client money held.
In response to Allied Tech’s filing on Thursday, SGXRegCo, the regulatory arm of SGX, wrote in a second notice of compliance that it will object to any future appointments of Mr Ong as a director or executive officer of any company listed on the SGX until the matters have been resolved.
It also ordered a special auditor to report solely to SGXRegCo its findings from an audit. According to its first notice of compliance on May 8, Allied Tech was required to appoint a special auditor after the firm said that its auditors had raised observations including the S$33 million held by JLC.
ALLIED TECH MADE "REPEATED" DEMANDS FOR FUNDS TO BE RELEASED
Allied Tech said that it made repeated demands since Mar 23 for JLC to release the balance of its escrow funds, including a letter on May 17 by law firm Rajah & Tann.
It also pointed out that the amount to be repaid is actually S$33.2 million and not S$33.4 million as stated in JLC’s letter.
“This is notwithstanding that at all material times, JLC Advisors’ managing director, Mr. Ong Su Aun, Jeffrey, had repeatedly represented to the Company that the release of the escrow funds would be forthcoming,” Allied Tech wrote.
“And had never once stated that the escrow funds were missing, that it had already been paid out or that JLC would not comply with the Company’s request to release the escrow funds in accordance with the Escrow Agreement.”
The Business Times cited a partner of Rajah & Tann, Mr Jonathan Yuen, as saying that the last email sent by Mr Ong was on May 13.
“Last email sent by Jeffrey Ong was on May 13, telling my client that he would be able to repay the money by Friday, May 17," he said.
The report added that Allied Tech instructed Rajah & Tann to issue a letter of demand on May 17, ordering JLC to release the funds by 4pm on May 22.
Hours before the deadline, however, a letter was hand delivered to Allied Tech with details of the funds being paid out, the report added. The letter did not have customary markings of an official letter from a law firm and the author was not named, the report said.
Allied Tech also said it asked JLC to provide documentary evidence and statement of accounts of the escrow funds, as well as updates on Mr Ong’s whereabouts.
SGXRegCo noted in its second notice of compliance that Mr Ong had on Monday resigned from Annica Holdings as non-executive and independent director with immediate effect, citing personal reasons. However, it added that there was no exit interview arranged for him.
On Wednesday, Allied Tech announced the termination of a memorandum of understanding related to a proposed acquisition of shares in Aik Chuan Construction.
According to TODAY, the proposed S$130 million takeover was to be paid with S$30 million and S$50 million in cash. The balance was to be paid through new Allied Tech shares.
In 2011, Singapore introduced new measures to safeguard conveyancing money, after several cases involving lawyers absconding with clients' money.
One of the most high-profile cases involved lawyer David Rasif, who made off with about S$11 million of his clients' money in June 2006. He is on Interpol's wanted list and is still at large.