SINGAPORE: The former chief executive officer of now-defunct steel manufacturer and trader Oriental Group Limited (OGL) was sentenced to nine years’ jail on Tuesday (Nov 7) for leading an elaborate market-rigging scheme that contributed to the company’s eventual demise.
Lee Wan Sing, a 47-year-old Malaysian, had deceived investors, banks and trading firms with a scheme where at least 50 trading accounts were used to conduct fraudulent trades, distorting the market and causing OGL’s share price to rise steadily by over 300 per cent.
To fund the trades, he took S$500,000 (US$369,000) in cash belonging to OGL, storing it in a safe in his room, and obtained credit facilities totalling S$1.4 million from banks by pledging his own OGL shares as security, even though their value had been artificially inflated.
Lee also hid his tracks from OGL’s auditors by creating false documents such as sales orders and tax invoices.
He became bankrupt in March 2017 and left Singapore for Malaysia in May 2017, even though he knew that the board of OGL had lodged a police report.
He remained outside Singapore until he was arrested in Malaysia in December 2021 and handed over to the Commercial Affairs Department.
Lee pleaded guilty to 17 charges including cheating, falsifying documents and multiple offences under the Securities and Futures Act. Another 46 charges were taken into consideration.
THE CASE
The court heard that OGL was a company incorporated in Singapore and was in the business of manufacturing and trading in steel bars.
Its shares were listed on the Catalist board of the Singapore Exchange from February 2010 until OGL’s liquidation in May 2019.Â
As of August 18, 2016, OGL had 342 shareholders.
For the financial years of 2014 and 2015, OGL reported net losses of 6.2 million yuan (S$1.2 million) and 87.6 million yuan respectively.
Lee was appointed CEO of OGL in 2014. He was paid S$240,000 in salary and S$20,000 in variable bonus for the financial year 2015.
In mid-2014, he noticed that OGL’s share price had started to decline. He wanted to push up the share price to counteract its decline, as a declining share price would affect investor confidence and make it difficult for OGL to raise funds through share issuances.
Lee had discussions with his co-conspirators, including OGL’s Group Financial Controller Lee Ong; shareholder Tan Seow Juay, who held at least 5 per cent of the firm’s shares; and Allan Chan Geok Leng, a shareholder who held at least 2 per cent of the company’s shares.
They agreed to take part in a scheme to push up the OGL share price, with another accomplice, OGL investor relationship manager Chong Yong Von, who was roped in by Lee around October 2014.
The scheme was executed as early as October 2014 and continued between April 2015 and January 2016.
During this time, Lee gave instructions to his accomplices to control the trading of shares issued by OGL to artificially push up the price.
At least 50 accounts were used to carry out the scheme – 40 of which were opened on Lee’s instructions for use in the scheme between December 2014 and December 2015.
The accomplices also carried out cross-trades, which were generally priced higher than the last done price, resulting in a raising of the share price.
Of the 186 active trading days in the scheme period, trades were conducted in the scheme accounts on 185 days. On 157 of these days, the accounts made up at least half of OGL’s daily traded volume.
Overall, about 339.5 million OGL shares were traded through these accounts, or 79.8 per cent of the volume traded during the scheme period, the prosecutors said.
Because of the scheme, OGL’s share price appeared to be increasing. It rose from a period-low of S$0.030 on Apr 8, 2015 to a period-high of S$0.134 in December 2015, before closing at S$0.127 on Jan 14, 2016.
Between the trading halts in January 2016 and March 2016, OGL’s share price fell even further from S$0.127 to S$0.114, representing a market capitalisation loss of S$6.86 million, the prosecution said.
To obtain more funds for the scheme, Lee conspired with Chan to issue fictitious sales orders of scaffolding materials.
A police report was lodged in December 2016, and OGL applied to halt trading of its shares on Jan 15, 2016.Â
A few days later, OGL published an announcement concerning unauthorised transactions involving two subsidiaries of its company that were unrelated to the scheme and requested for the trading halt to be lifted.
The share price fell to a single-day low of S$0.090 on Jan 26, 2016, but later recovered to S$0.121 by Jan 29, 2016.
OGL applied to halt trading of its shares again in March 2016 and also for trading suspension. The associated announcement made no mention of the share price manipulation by Lee and his accomplices.
Lee ceased his appointment on May 11, 2016. He was adjudged bankrupt on Mar 23, 2017 and left Singapore for Malaysia in May 2017. He remained outside Singapore until he was arrested on Dec 1, 2021 in Malaysia.
As of Mar 8, 2016, about S$3.2 million was owed to various trading firms for the fraudulent trades in the accomplices’ accounts. These have been fully paid off by the respective accomplices, but S$113,000 remains outstanding in Lee’s own trading accounts.
The prosecution sought 10-and-a-half to 12 years’ jail for Lee, saying that his offences affected OGL, its investors, banks, trading firms, the broader securities market and the investing public.
“The direct financial losses caused by the accused to OGL and the banks were highly significant at S$357,500 and S$381,135 respectively,” said Deputy Public Prosecutor Ryan Lim and Gan Ee Kiat.
“They undoubtedly played a role in OGL’s ultimate demise,” they said.