Published October 16, 2008
Jade saga impacts other takeover bids
Now, cash must be deposited with the financial institution
By CHEW XIANG

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'AFTER Jade happened, we started cursing because for takeovers we now need to deposit cash with the financial institution,' says lawyer Nicholas Narayan.
'We cannot just be relying on 'letters of comfort' any more.'
It's just one sign of the impact of the botched takeover of Jade Technologies, a tiny Catalist-listed company. On Tuesday, the Securities Industry Council released an 86-page report, the result of a six month investigation into breaches of the non-statutory Singapore Code on takeovers and mergers. In a no-holds barred review, few came out smelling of roses.
Anthony Soh, who had made and then withdrawn the 22.5 cent offer in April, was banned from making any takeover offer for five years, and from dealing in shares for three years.
The SIC also opined that he was unsuitable to be a director of a listed company for five years.
His financial adviser, OCBC Bank, too was censured for 'serious lapses' in failing to ensure Dr Soh had sufficient resources. The bank had signed off on the offer document, confirming that Dr Soh had the funds and the shares to go through with the offer, although it's now clear that this was not the case.
OCBC failed to verify this before the offer announcement went out, and is claiming instead that it was a victim of fraud. The bank remains adamant that there is 'no issue' of compensating anyone for losses suffered, says Koh Ching Ching, its head of group corporate communications.
'OCBC Bank has been legally advised that it is not responsible for and is not the effective cause of the withdrawal . . . (it) was a disclosed risk that ultimately and unfortunately materialised,' she said.
Lawyers say that for aggrieved investors to take action against the bank, they must be able to show that they relied on OCBC's representations. 'It's not so easy for the investor,' says Mr Narayan, while another points out that the SIC had not ordered any compensation paid.
One party which escaped relatively scot free was Merrill Lynch. When Australian broker Opes Prime failed in March, Merrill seized more than 200 million Jade shares to enforce its claims on Opes as a creditor.
Dr Soh had earlier pledged 300 million shares to Opes in return for loans.
On Tuesday, Merrill was faulted by the SIC but was not censured. Investors were upset that the bank had sold shares in Jade before the bid collapsed, benefiting from the market's then ignorance.
Merrill said that it had notified the company, fulfilling its duty as a substantial shareholder. But the SIC said that as an 'associate' of the takeover, it should also have informed the council and the public.
This it did not do, but the council accepted the breach was 'neither opportunistic nor intentional' and that Merrill had acted in good faith. Meanwhile, the police are investigating why disclosures to the company was not made public.