The appeal hearing of convicted market manipulators Soh Chee Wen and Quah Su-Ling resumed on Monday (May 5) after a two-month recess, with defence lawyer N Sreenivasan contending that the trial judge had downplayed the culpability of several prosecution witnesses who actively traded Blumont Group, Asiasons Capital and Liongold Corp before the stocks crashed in 2013.
Soh and Quah were found guilty in 2022 for orchestrating Singapore's largest securities fraud through the three stocks - collectively known as BAL. The scheme ran from August 2012 to October 2013 and ended abruptly when the shares collapsed on Oct 4, 2013, wiping out more than $8 billion in market value.
Soh was convicted of 180 charges and sentenced by High Court Judge Hoo Sheau Peng to 36 years in jail. Quah was found guilty of 169 charges and given 20 years behind bars. The charges involved false trading, price manipulation, deception, cheating and - in the case of Soh - witness tampering.
'Another game in town'
"There was another game in town. The failure of the prosecution to identify the game early, taking a blinkered approach, resulted in the truth not coming out," Sreenivasan, Soh's lawyer, said at the appeal hearing, which is presided by Chief Justice Sundaresh Menon, Justice Andrew Phang and Justice Tay Yong Kwang.
The prosecution witnesses he alluded to were Dick Gwee, Ken Tai, Henry Tjoa, Gabriel Gan and Leroy Lau, all of whom were found to have worked in concert or on their own to trade the BAL shares and profit from them.
They were described in court documents as the Manhattan House Group, a reference to their trading operations carried out from an office unit they had rented along Chin Swee Road. Gwee and his family members were found to have made some $50 million in profits from trading the three stocks.
See also: Penny stock crash appeal hearing off to bumpy start for accused
"What the prosecution's case was is that what the Manhattan Group did was entirely at the behest of my client, and only at the behest of my client", when in fact they themselves were responsible for a huge number of trades, Sreenivasan, a senior counsel, said.
"How are we to say which market manipulation charges are to the account of the appellant and which part of the market manipulation charges are to the account of the independent operations? The prosecution has not recognised the possibility that some of the trades were not even on our instructions."
As the charges were not "compartmentalised", the prosecution was wrong to have taken an "all or nothing" approach, he said. "It was never the prosecution's case that there was another game in town."
See also: John Soh, Quah Su-ling back in court to fight convictions
Covering up
Some of key prosecution witnesses also contradicted each other when they testified during the trial, which lasted more than three years, according to Sreenivasan.
"Dick Gwee's evidence as a prosecution witness was that he was not involved in market manipulation on behalf of the appellants. That was the prosecution's case. But that was contradicted by Ken Tai, Henry Tjoa and Gabriel Gan, all three of whom gave evidence that they lied to cover up for Dick Gwee."
Tai himself admitted that he made profits for Gwee, Sreenivasan pointed out.
"When Dick Gwee was selling high to make a whole lot of money, Ken Tai was using the accounts of John Soh's associates to buy. Ken Tai admitted that every dollar Dick Gwee made came at the expense of John Soh's associates. That's a very strange way for John Soh to manipulate the market."
The trial judge was therefore wrong in sentencing Soh and Quah to jail without adequately considering the actions of the Manhattan Group, he said.
"It is an abject failure that there was no focus on (the Manhattan Group) and what they did with each other. The significant trading activities carried out by (the Manhattan Group) was with Dick Gwee as a counterparty.
"(The prosecution) had no problem implicating John Soh and Quah Su-ling. Why would these key witnesses, so-called witnesses of truth, cover up for Dick Gwee but not for John Soh? The only answer must be there were two separate teams in play."
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Sreenivasan also took issue with the credibility of some of these individuals. "Ken Tai said 'I never gave Henry Tjoa (trading) instructions.' Henry Tjoa said 'I got instructions from Ken Tai'. One of them can be telling the truth, can't be both."
In response, Justice Phang said while their credibility may be an issue, "it doesn't mean that every time someone says a half truth, that is the end of the matter".
"It could well be that (the trial judge) has followed the overall evidence, some of which could explain contradictions and some of which would make certain contradictions perhaps legally irrelevant, even though they were factually existent. We must draw a distinction there because here we are dealing with what the legal liability is, whether an offence is committed in law," Justice Phang said.
The senior counsel also spent a good part of the hearing asserting that Leroy Lau, then a proprietary trader at DMG & Partner Securities, had traded on his own and on the instructions of Gwee rather than Soh's.
In response to Sreenivasan's arguments, Chief Justice Menon said: "These are experienced traders. It wasn't the case that they needed to be told, transaction by transaction, 'Let's do this transaction now'.
"What the judge was really relying on was looking at the broad instructions they were given pursuant to which they were able to carry out or fulfil the instructions on a day-by-day basis."
Even if the Manhattan Group ran a "parallel rogue operation on their own or for their own benefit", CJ Menon said that does not suggest Soh has no liability.
"I think the attempt to equate the fact that Dick Gwee made $50 million with the conclusion that therefore Dick Gwee - and not your client - was ultimately behind the manipulation, with respect, seems incorrect," he said.
"The difficulty that I'm struggling with is that you pointed to the fact that there's this other game going on, as though that undermines the primary case the prosecution put forward. It doesn't.
"The two can perfectly co-exist. In the judge's findings, there were suggestions that your client knew that Dick Gwee was profiting off these transactions and while he wasn't thrilled about it, he allowed it to continue."
The hearing continues on Tuesday (6 May).
