Engineering firm files police report after S$33 million and lawyer go missing

SINGAPORE — Engineering firm Allied Technologies said on Thursday (May 23) in an exchange filing that it is making a police report. This is after it was told that S$33.4 million from its escrow account may have been paid out under the instruction of a senior lawyer who has since gone missing.

On Wednesday, it received a letter from JLC Advisors — the law firm holding its escrow account — stating that the instruction by its managing partner Jeffrey Ong “might have been unauthorised”.

JLC Advisors said in the letter that it is still investigating and has lodged reports with relevant authorities.

Escrow accounts are a means for solicitors to safe-keep a buyer’s funds during the sale of property. In Singapore, these are used predominantly by solicitors to control the flow of funds during various stages of the transaction.

In response to Allied Technologies' revelations, SGX RegCo — the regulatory arm of the Singapore Exchange (SGX) — said that it will object to any future appointments of Mr Ong as a director or executive officer of any company listed in Singapore.

Besides Mr Ong’s possible involvement with the missing money, SGX said that he has also resigned, with immediate effect, as the independent director and acting non-executive chairman of Annica Holdings on May 20, citing personal reasons.

SPECIAL AUDIT

In an exchange filing on May 8, the Catalist-listed Allied Technologies said that its auditors had flagged some observations, including the S$33.4 million being held by JLC Advisors.

Based on SGX RegCo’s first notice of compliance issued on May 8, Allied Technologies was required to appoint a special auditor. SGX has now ordered that the special auditor report solely to the regulator its findings from the special audit.

Besides looking into the circumstances leading to Allied Technologies placing its funds with JLC Advisors, SGX also said that the special auditor will have to investigate developments surrounding the missing money.

Allied Technologies said that it has repeatedly demanded that JLC Advisors repay the balance of what is left in its escrow account since March this year.

The precision engineering firm said that the amount to be repaid is really S$33.2 million instead of S$33.4 million as stated in JLC Advisor’s letter to the company.

Besides pointing out that JLC Advisors got the amount incorrect, Allied Technologies claimed that the law firm breached the obligations under the escrow agreement both parties entered into in October 2017.

Allied Technologies said that Mr Ong had “repeatedly” told the firm that JLC Advisors would soon release the funds and never once stated that it was missing or that it had already been paid out.

The engineering firm also asked JLC Advisors to produce documents that show the movement of the escrow funds and to give updates on Mr Ong’s whereabouts.

Other than making a police report, Allied Technologies also reported the case to the Law Society of Singapore and has “commenced legal proceedings”.

The curious case of the missing S$33 million was first reported by The Business Times on Thursday. It also reported that Mr Ong has not been contactable.

The Law Society confirmed to The Straits Times on Thursday that it has intervened in JLC Advisor’s client account because it received information which led it to suspect that a lawyer with the firm was dishonest.

It urged other law firms to send in details of their client’s money that JLC Advisors may be holding.

In an earlier statement to The Straits Times, JLC Advisors said that it was informed of “certain matters” regarding one of its clients’ accounts which the firm was not previously aware of, and that it is a cause of “great concern”.

"We have reported the matter to the police and the Law Society, and are cooperating fully with these authorities to resolve the matter," it said.

On Wednesday, Allied Technologies announced that it was terminating a planned acquisition of Aik Chuan Construction, a company that builds, develops and manages foreign worker dormitories.

The proposed S$130 million takeover was to be satisfied by S$30 million and S$50 million in cash, with the balance paid through the issue of new Allied Technologies shares.

In 2011, Singapore tightened the laws surrounding how law firms handle clients' money, after two high-profile cases of rogue lawyers.

In June 2006, lawyer David Rasif made off with about S$11 million of his clients’ money — most of which had been entrusted to him by an American couple who wanted to buy a bungalow off Holland Road. In November 2007, lawyer Zulkifli Mohd Amin ran off with about S$6 million — some of it allegedly from a conveyancing deal. Both men remain at large.

Under the rules, conveyancing monies will have to be held in special accounts, which will be offered by banks appointed by the Ministry of Law. Movement of funds within such an account will also be controlled: For instance, two signatories are required before any money is paid out, while clients will have to state the name of the law firm on the cheque when making payments.

Lawyers who breach the rules could be fined up to S$50,000 or jailed for a maximum of three months.