JLC law firm seeks S$32.1m from two companies and their owner

Singapore

JLC Advisors, the law firm at the heart of Allied Technologies' missing S$33 million funds saga, is seeking to recover from a businessman and his two companies about S$32.1 million, which JLC claims its managing partner Jeffrey Ong Su Aun has "wrongfully" paid out to.

JLC on Monday filed its defence to a S$3 million lawsuit from dormitory operator Aik Chuan Construction, and is also counter-suing - through Christopher Anand Daniel from Advocatus Law - Aik Chuan Construction, Aik Chuan Investment and Ken Lim Yew Ming, the owner of these two companies .

In a suit filed last month, Aik Chuan Construction said Ong had asked for a S$5 million loan in July last year for the "operational needs" of his law firm. The company is seeking to recover S$3 million, which it says is the unpaid amount of the loan despite repeated demands to JLC.

JLC rejected allegations that the 41-year-old Ong had asked for a loan on its behalf. Instead, it pointed to the law firm's records to say that Ong was just a witness to an agreement dated July 2, 2018 under which Aik Chuan Construction lent another company Transoffshore Logistics S$5 million.

The law firm said the loan to Transoffshore was for the purpose of paying off outstanding loans due to Zachnic Investments to redeem a terrace located at 383 Pasir Panjang Road, and subscription of S$1.4 million worth of shares in mainboard-listed offshore and marine player Falcon Energy Group through Platform Capital Asia as an intermediary, with the balance used for working capital.

JLC's trust matter ledger recorded S$1.4 million being paid out to Platform Capital Asia as "disbursement of subscription funds" on Jul 9, 2018, and another S$3.6 million paid out to Asia Box Office as "term loan facility agreement" two days later, said JLC in its defence.

Platform Capital Asia and Asia Box Office were mentioned by Catalist-listed precision metal stamping manufacturer Allied Tech in early May when it made known its auditors' observations relating to Asia Box Office, which is an ecommerce ticketing solutions platform that Allied Tech in 2018 paid S$30 million for a 51 per cent stake.

Allied Tech in late May announced it would be calling off its proposed acquisition of Aik Chuan Construction and its subsidiaries.

It then reported a day later that its S$33 million escrow funds parked with JLC had gone missing, and Ong was said to have instructed the payout.

Ong, who had exited Singapore on May 13, was caught in Malaysia on May 29. He was extradited to Singapore on May 30 and is now remanded on cheating and forgery charges unrelated to Allied Tech.

JLC's alternative argument is that Ong did not have authority from the law firm or its partners to take the alleged S$5 million loan on behalf of the firm.

Besides defending the claim from Aik Chuan Construction, JLC has also launched a counter-suit to recover about S$32.1 million, including the S$2 million that was said to be a repayment of the S$5 million loan from the dorm operator.

JLC claims that Ong had "wrongfully" instructed the disbursement of S$2 million on Aug 17 last year as well as the payout of various sums ranging from S$135,000 to S$10 million as far back as August 2016 to January this year from the law firm's clients' accounts to Aik Chuan Construction, Aik Chuan Investment and Mr Lim.

These sums were held on trust for JLC clients, the law firm states in its counter-claim without naming the clients.

A pre-trial conference for the lawsuit is scheduled in August.

Allied Tech, meanwhile, is expected to report a net loss for the three months ended March 31, the company said in a profit guidance note on Monday. The losses for Q1 2019 are mainly due to declining gross profit margin arising from the challenging business environment.

The company is still in the process of finalising its financial results for the first quarter, and will release them by July 25.

Allied Tech shares have been suspended since May 8. They last traded at 1.1 Singapore cents on May 2.