6 July 2020
For the Attention of: DBS Board Members
He Who Rides a Tiger Finds it Difficult to Dismount
It’s not easy questioning the actions of either DBS or their client, because they are both powerful adversaries with more resources and ability to control events in Singapore than I do. However, I feel so strongly that a wrong has been committed which may have then led to corporate governance lapses in DBS, that I continue to speak up.
The message delivered by lawyers acting on your behalf, the Board of the largest bank in Southeast Asia
"Should you choose to disclose our correspondence with you to any third parties without our client's consent, our client will take such further action as it deems fit and necessary to protect its interests without any further reference to you”.
The correspondence in question included the purported findings of numerous investigations into the authenticity of just two DBS letters. Letters which had been used in what can only be described as a dubious transaction. These letters would assist an influential client of DBS to defraud an Australian shareholder. If via Wong Partnership, DBS are providing honest findings, exactly what interests need protecting if those findings were made public?
If DBS sent the two letters on the dates shown on them, they were not tampered with after leaving DBS and they were sent for legitimate reasons, then publicly own them. If the letters didn’t originate from DBS, they were tampered with or not sent for a legitimate reason, then publicly own up to what has occurred. Live up to the ethos which DBS promotes of transparency, honesty and accountability and not threaten me to keep your secrets. This is not about banking secrecy, but doing the right thing. You will notice the word coincidence used a few times throughout this letter!
The Big Picture
Let's start with the big picture. In 2011/12, Australian owned Strategic Marine Pty Ltd was experiencing some financial distress, DBS was the principal financial institution for its Singapore subsidiary. However, by 2013 Strategic Marine Pty Ltd and its wholly owned subsidiaries in Singapore and Vietnam [“SM”] appeared current on their loans, performing well, would go on to make a NPAT of A$15,366,617 in mid 2014 and have a significant amount of cash. On the other hand, the empire of your influential Singaporean client, Lionel Lee the MD of EZRA Holdings [“Lee”], was already showing signs of distress. Yet it appeared that DBS was exerting significant pressure over SM to sell the company or its assets to one of Lee’s companies.
When obstacles, being allegations of forgeries implicating Lee, a BDO valuation and a shareholder's exercised pre-emptive right got in the way of Lee’s plan to acquire SM for $7 or A$1.265M, DBS letters appeared just like a superhero out of a comic book, to rescue the deal. Coincidence?
The Tale of Two DBS letters
The first DBS letter dated 30 July 2013 addressed to SM Singapore included a covenant:
"Shall use its best endeavor to ensure that a new investor is secured for the injection of fresh equity into the Company by 30 August 2013, such investor being satisfactory to the Bank".
This was impossible because Lee’s “related party”, Wilson Tan - ex-CEO KTL Global - held an irrevocable option preventing anyone else from getting involved in SM. He was also the Power of Attorney for SM. Let me say that again - DBS was asking for a new investor when it was impossible to do so. DBS knew of the involvement of Wilson Tan and that one of Lee’s entities was to acquire SM. There was no new investor. DBS officials were asking for what they knew could not be delivered.
The Wilson Tan Option deed was signed on 6 October 2012. But then my husband was offered and exercised his legal pre-emptive right on 17 July 2013. On 26 July, between my husband exercising his pre-emptive right and DBS showing up with their first letter, my husband was threatened with a million-dollar lawsuit unless he sold his SM shares to Lee for a nominal sum and gave up his legitimately exercised pre-emptive right to purchase SM.
The next day, my husband texted the messenger that he would not be coerced. The messenger responded and apologised for delivering the intimidatory messages, apparently it was a task he didn't enjoy! Then what happened just three days later? DBS showed up with a letter setting a deadline for SM Singapore to find a new investor. Why was this letter sent by DBS if it was not to pave the way to change the SM Constitution to remove my husband’s exercised pre-emptive right and prepare for the second DBS letter?
In the second DBS letter on 11 September 2013, DBS was threatening foreclosure with a final deadline, because the new investor had not been brought in - a situation DBS should have known was impossible. The final deadline, was to be just days after the SM EGM was to be held to amend the SM Constitution to remove my husband's exercised pre-emptive right, which was one of Lee's roadblocks. Coincidence!
On 4 September, just one week prior to the above DBS letter being sent, BDO had valued SM at between A$35.03M and A$42.02M, DBS then miraculously showed up one week later with a foreclosure letter. Another Coincidence!
Just one week after the DBS letter threatening foreclosure, guess what happened? BDO reduced their valuation by between 92.2% - 96.6%!! Wait a minute, think about this, BDO reduced their valuation by up to 96.6% in the space of 14 days. What happened? Well the only thing that happened was that DBS had sent the second letter, which decimated the value of SM to A$1.17M – A$3.26M and set the scene for Lee to take control of SM for A$1.265M. What a coincidence! I thought the timing of the actions were crystal clear, and the pieces fitted together like a John Grisham novel. It was a brilliant but corrupt scheme and if DBS knew what was happening, they never should have had any part in it.
Step back and contemplate this situation. We are told that Lee is getting pressure from DBS because it is absolutely clear his empire is crumbling and DBS has significant exposure to what is looking like bankruptcy. Lee hatches a plan, to give Wilson Tan the option to buy SM effectively for nothing. Then Tan’s option deed is to be put through the shredder and replaced with one giving Lee control and allowing Lee to pledge SM as collateral and get DBS off his back. So what was the facade about a new investor, being acceptable to DBS injecting equity into SM? Lee's plan was going smoothly until I uncovered allegations of forgeries on four SM documents, alleged to have been delivered to the offices of EZRA Holdings. This resulted in my husband being offered and exercising his pre-emptive right to purchase SM.
We thought that the DBS letters were forgeries – that they had been tampered with. Because we didn't believe that DBS would be complicit in such a diabolical scheme to defraud, or to send letters containing so many errors and inaccuracies. DBS is known for being pedantic, not sloppy in communications, so what happened with quality control in these two letters? A forensic document examiner has stated that the DBS letter lacks credibility, and a former member of the DBS financial crime team supports that statement. Neither our lawyer, the SM lawyer or BDO could authenticate the DBS letters or determine if and why DBS was taking the action against SM. Coincidence!
Such was our concern with the authenticity and use of the DBS letters, that prior to Lee completing the acquisition of the SM assets, our lawyer wrote to the DBS Group Head of Legal, Compliance and Secretariat. They were asked if the DBS letters were authentic. With there being allegations of forgery on four SM documents claimed to have been delivered to the offices of EZRA Holdings, it wasn’t too far-fetched to believe that dodgy DBS letters were also being used in the same transaction.
DBS Investigations
Remember, we weren’t asking DBS to investigate the 1MDB scandal - just the authenticity of these two letters. But there were to be four DBS investigations and two DBS SpeakUp investigations over a six-year period, 2014 - 2020. The DBS investigations went on for far too long for them to be a legitimate review of the situation in my opinion and this just compounded our concerns.
A Synopsis of the DBS investigations:
INVESTIGATION ONE - Managing Director and Head Group of Legal, Compliance & Secretariat (2014)
Our lawyer sent a letter to DBS prior to Lee acquiring the SM assets. He included the purported DBS letters, a description of the devastating impact the letters had on the SM valuation, the EGM Notice, the potential conflict of interest of DBS and concerns over the authenticity of the letters. Eight weeks passed before a response was received from DBS. Coincidentally, this was to be after Lee had completed the sham acquisition of the SM assets in Singapore and Vietnam.
DBS responded that they were unable to answer any of the questions due to banking secrecy obligations. No banking secrecy concerns should have existed as to the authenticity of the purported DBS letters, if they were authentic and sent for legitimate reasons. Was it at this point that someone within DBS took the decision to climb onto the back of the tiger?
INVESTIGATION TWO - DBS Group Head of Financial Crime ["GHFC"] (2016)
After further research, I uncovered information which would question why DBS was threatening to foreclose against SM Singapore. I wrote to the DBS GHFC. After six-months of excuse after excuse for delays in the investigations, we were asked “what letters”. We were advised that if we resent the letters, an investigation into their authenticity would only take a few hours, but the findings could not be provided to us. Really what was the point of that? After I wrote to you, the GHFC was authorised to provide me with an obfuscated response. When I asked for confirmation that the DBS letters had been sent on the dates shown on them and that they had not been tampered with after leaving DBS, I was advised that the case was closed. When I followed up, I was informed that the GHFC had resigned from DBS.
INVESTIGATION THREE - DBS Group Company Secretary ["GCS"] (2017)
I asked the GCS the same questions as I had asked the GHFC. Yet, despite there being two previous investigations spanning eight-months, again there was to be delay after delay in authenticating the letters. Excuses included having to liaise with stakeholders, then internal stakeholders and then key stakeholders. I fail to understand why the authentication of documents would be a subjective process. I was then to be advised that the delays were caused by the DBS team wanting to undertake a proper job. The leads me to question why investigations one and two undertaken by DBS Legal and then Financial Crime were not “proper”? I was told that the findings into the authenticity of the DBS letters were not to be made public.
INVESTIGATION FOUR - DBS Group Head of Financial Crime (replacement) lauded as the best candidate in Asia, (2017 - 2018)
Such was my concern over the earlier three DBS investigations into the authenticity of the DBS letters, that just six-months into his new role, I asked the new DBS GHFC to conduct a cold-eyes review of investigations one, two and three. I was to be provided with the identical obfuscated letter, which the DBS Board had agreed his predecessor could provide. When I again asked the same questions, if the letters had been sent on the dates shown on them and if they had been tampered with after leaving DBS, I was once again advised case closed. What a coincidence!
INVESTIGATION FIVE - DBS SpeakUp (2018)
Concerned by now that someone at DBS was covering up a fraud, I wrote to DBS SpeakUp and asked that very question. Despite Deloitte advising that I would receive a response in 7 days, two months later I was advised that there was no evidence to support my allegations. I was informed by the DBS GCS who undertook investigation three, that he was being transferred to another department and replaced by his deputy. He then went on to state that the second DBS GHFC, who undertook the cold-eyes review in investigation four, was now serving his notice. Just 12 months in the role, he was also to leave. The very person I had asked to undertake a cold-eyes review of the three prior investigations was gone. These letters were beginning to feel like a bad luck charm!
Wong Partnership (2018)
Following the transfer of the GCS and the departure of GHFC, Wong Partnership were engaged by you, to provide me with the purported findings of investigations two, three and four. When I reached out to both former GHFC who undertook investigations number two and four to query why they failed to answer the questions put to them, I was swiftly advised by Wong Partnership that I could not disclose the contents of the correspondence which included their investigation findings to any third party. It appeared not even the persons who undertook the investigations could be told of the findings being provided to me. Would I be telling them something which they didn't already know?
INVESTIGATION SIX - DBS SpeakUp (2019 - 2020)
My husband was encouraged, as the principal defrauded, to submit his own DBS SpeakUp submission. This investigation spanned approximately seven months, was completed in April 2020, and in my opinion appeared nothing more than a DBS risk assessment process! My husband was told from the outset, that under no circumstances would the authenticity of the DBS letters be investigated, as that subject matter was closed. I was flabbergasted that a whistleblower hotline would seek to stipulate prior to the commencement of any investigation, what subject matters they would or would not investigate.
During my DBS SpeakUp submission, I was provided with a Deloitte reference number and a response from Deloitte in relation to the findings. My husband received no Deloitte reference number on his final report and no response through Deloitte. Who audits the DBS SpeakUp process to ensure that it's not an ownself check ownself process? Both the PwC Partner in Charge of the DBS Audit and the DBS Audit Committee Chairperson have failed to respond to that question.
PWC
I contacted the PWC Partner in Charge of the DBS Audit and raised concerns. When I later followed up to ask whether she had in fact investigated my concerns, I found that she had left PWC. (Update) - The replacement PWC Partner in Charge of the DBS Audit did not respond to my emails in relation to the auditing of DBS whistleblower program SpeakUp. I have since been advised that he too has left PwC. Despite being asked, DBS have not provided the details of the current PwC Partner in Charge of the DBS Audit.
Was DBS in Search of the Truth?
During the last five DBS investigations, what I saw was a team who I believed already knew the truth. A team seeking to try and determine if they could continue to deny the involvement of DBS or their client in defrauding my husband. Was DBS so deathly afraid of answering the questions put to them, because they couldn’t answer them without incriminating those involved in the initial investigation? In short, did DBS paint itself into a corner from which there was no escape, only obfuscation, delay, diversion and threats in the service of a cover up? Has the internal system which was set up to protect DBS and others been compromised? Have DBS climbed upon a tiger from which they are finding it difficult to dismount?
I witnessed your client take control of the Singapore and Vietnam assets of an Australian company, at a low valuation to use as collateral for his rapidly crumbling empire. A disaster in the making, that surely DBS staff must have been aware of. It’s not unknown for good people at a bank to get corrupted by a large and powerful client, coerced into doing what they shouldn’t or simply being wilfully naïve because they view it as to be in their interest to do so. There were at least two meetings described as being attended by a DBS MD as a favour to Lionel Lee, where they asked that DBS not be advised. On one occasion described as asking that the order book of SM be passed not to them directly at DBS, but via the personal assistant of Lionel Lee. To me I see that as covert meetings and passing sensitive information to DBS staff in an unorthodox manner.
There are clearly questions to be addressed about internal governance at DBS. Was DBS an accomplice, an enabler or was the name of DBS used and abused by other parties which left DBS stuck on the back of a tiger? Additional information surrounding the transaction can be found here.
I look forward to transparency, honesty and accountability from the Board of DBS, devoid of threats from your lawyers.
Sincerely,
Julie O’Connor (Mrs)
c.c. Piyush Gupta - DBS
Marcus Lim – Monetary Authority of Singapore
Tharman Shanmugaratnam – Chairman Monetary Authority of Singapore
Melvin Poon – PWC Partner in Charge DBS Audit
Update: In early 2022, DBS lawyers corresponded with Asian Sentinel in relation to a story that they were publishing. The article included:
"The central issue, according to the law firm, “pertains to the authenticity of the two letters, and investigations confirmed the letters are authentic. The contemporaneous record shows the circumstances under which these letters were sent fully justified their existence. There is no evidence of wrongdoing on the part of DBS or its employees.”
“It added that Mrs. O’Connor had acted with malice, which seems far-fetched but in legal terms would appear to be preparation for a lawsuit." At the very least, there is no reason those irregularities and the many other serious concerns she raises shouldn’t be explained by DBS, the Singapore regulators, and legal bodies."
I am pleased to see DBS publicly take ownership of the letters, however they have provided no evidence that the letters are authentic or why if they were not tampered with there is no bank reference, no sender's address and the author's signature appears to have been copied?
Maybe DBS are confusing malice with having the courage to SpeakUp. The G in ESG is not silent and neither am I. Questions that need answering include, but are not limited to:
1. Why did DBS Legal, Compliance and Secretariat take eight-weeks to respond to Minter Ellison refusing to authenticate the two letters, when DBS were aware that the transaction involving the parties mentioned, was imminent? OCBC was able to provide a response in 48-hours.
2. Why was a DBS MD of Institutional Banking alleged to be undertaking favours for a DBS client in respect of the companies involved in the transaction, but requesting that the bank not be made aware? Why was the same staff member asking that sensitive information be sent to her via a third-party?
3. A sham option deed was used as part of the conspiracy to defraud, what did DBS know of its use?
4. Why did DBS Legal, Compliance and Secretariat demand that before a whistleblower submission (DBS SpeakUp) would be accepted, the applicant had to agree with DBS that the two DBS letters were authentic and that he was not to make any mention of them in his submission?
5. Why did the purported DBS whistleblower findings not contain any DBS SpeakUp reference and not come through the DBS SpeakUp channel administered by Deloittes?
6. When was DBS made aware of the writ which had been served on two subsidiaries of EZRA Holdings, which implicated one of their Board Members in a pattern of fraud, involving Strategic Marine? Did the EZRA Holdings Board make DBS aware prior to DBS increasing its financial exposure to the EZRA Holdings Group and the US2billion of proposed transactions involving EZRA Holdings being announced?
7. Was DBS aware that the Chairman of Triyards/MD EZRA Holdings held a claim to a beneficial interest in a shareholding of the vendor Strategic Marine Pty Ltd, a shareholding which was entitled to 99.8% of any dividends paid by the vendor? Dividends which could have resulted from the A$23,300,000 which Triyards paid for the Strategic Marine assets.
All those involved knew that Triyards was planning to acquire Strategic Marine, so why was DBS asking the Directors of Strategic Marine to provide the option deed for KTL Global CEO Wilson Tan to acquire the same? We were told by a party to the transaction that Wilson Tan's option deed was a sham to be used in a conspiracy to defraud and as part of a plan to manipulate the Triyards share price. Below is the agenda for a meeting attended by the Strategic Marine Directors and an EZRA Holdings Board Member, and a draft letter which DBS sent to Strategic Marine a day earlier.
