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PENNY STOCKS SAGA

John Soh touted Blumont as the next Rio Tinto, says remisier

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Blumont's core business segments include mineral and energy resources - the same as Rio Tinto's key sectors.

Singapore

THE court heard on Monday, in the ongoing trial of John Soh Chee Wen and Quah Su-Ling, that Soh was the towkay of a Malaysian syndicate behind market manipulation, and that he had told a room packed with brokers about the "bright prospects" of Blumont Group; he had touted it as the next mining giant Rio Tinto, and said that its stock price could hit S$5.

Former remisier Lee Chee Wee Andy, testifying on Day 8 of the hearing, said he had been invited by Quah to attend a presentation at LionGold Corporation's office in late September 2013.

It was there that he first met Soh, introduced by Magnus Energy Group's then-chief financial officer (now chief executive officer) Luke Ho Khee Yong. Mr Lee said he knew by then that he and Mr Ho were both working for the same Malaysian syndicate, with Mr Ho managing one of the companies the group controlled, while he helped with the manipulative trading.

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Mr Lee described in his evidence that the LionGold office at that time was "very crowded" with brokers, and Soh did not introduce himself to those present.

"I had the feeling that he did not need to, because everyone present knew who he was ... JS (John Soh) painted a very positive picture of Blumont's future. He claimed that it would be the next Rio Tinto. I remember him mentioning that its share price would hit S$5," Mr Lee said.

Blumont's core business segments include mineral and energy resources - the same as Rio Tinto's key sectors.

Soh, 59, and Quah, 54, are now on trial for allegedly orchestrating a secret web of 189 accounts belonging to 60 individuals and companies, with the aim of artificially inflating the prices of Blumont, Asiasons Capital (now Attilan Group) and LionGold, collectively known as BAL.

The penny stock crash of October 2013 was the result.

Soh had said at the presentation that Blumont would be the "mothership", while Asiasons and LionGold would be the "subsets", the court heard on Monday.

While he did not expressly urge those present to buy or promote Blumont, Mr Lee said it was obvious that it was a sales pitch for Blumont shares. He was sold on the potential bull run that he bought Blumont shares at S$2.29, and bought the counter for four of his friends as well.

However, the prices of BAL stocks dived days later, wiping out S$8 billion in market value in a matter of days.

Mr Lee said he had to resign from Lim & Tan Securities in February 2014 because the accounts that were controlled by Quah had outstanding trading losses of S$1.8 million.

To this day, the 42-year-old, currently unemployed, is still making good to Lim & Tan for the losses through monthly instalments of S$500.

Mr Lee told the court that he had inherited the clients from a colleague who had quit in 2003, including the accounts of five individuals that would later be controlled by Quah.

These include Ooi Kwee Seah, Ong Kah Lee and former LionGold director Peter Chen Hing Woon; these three Malaysians' accounts were "a Malaysian syndicate's accounts", said the colleague who had quit; this colleague said that an Alice Ang would be trading using these accounts.

"My understanding was that the syndicate would use these accounts to trade, and they were able to control share prices and move it up or down," he testified.

He said he took trading orders for these accounts thereafter from Ms Ang, a UOB Kay Hian broker. In 2004-2005, she asked Mr Lee for other individuals' accounts as well, for her to place trades in.

Mr Lee roped in Magnus' Mr Ho. He later realised that Ms Ang seemed to know Mr Ho.

According to Mr Lee, her practice of trading using others' accounts went on from 2003 till around early 2012, when she introduced Quah, who then took over from her.

But unlike Ms Ang, Quah traded mainly in BAL stocks and on roll-over contra - that is, she would buy back a similar quantity of shares in the same counter shortly after selling them when the payment grace period of five days was up.

This led Mr Lee to suspect that Quah could be manipulating the market, but he asked no questions because her trades had played a big part in swelling his annual net commission from S$60,000 to S$150,000.

Further, he also suspected that she was arranging orders at other brokerages at the same time to accept those trades she placed through him.

Mr Lee said under cross-examination by Soh's lawyer N Sreenivasan that he had lied in five police statements that he did not know the identity of the presenter who made the Blumont pitch.

But he told the prosecution when interviewed last April that Soh was, in fact, the presenter, as well as about Quah and Ms Ang's involvement.

He said he had not been truthful earlier because if the two accused were convicted, he "would have no one to turn to for recovering" the trading losses Quah had racked up; he, as remisier, would then have had to be responsible.

Further, he wanted to distance himself from the syndicate's "big boss" Soh in a bid to hide his involvement in helping to place the trades for Quah.

He is the third prosecution witness who has admitted to lying initially to the police. He will continue to be cross-examined on May 6.