Published January 10, 2009

OCBC hits back at Soh's 'insider' charge

It says allegation just aims to scandalise and embarrass rather than to introduce any true or relevant pleading

By CHEW XIANG

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OCBC Securities, benefitting from inside knowledge, sold off 101 million Jade Technologies shares in early April - just days before a takeover bid for the company collapsed - according to investor Anthony Soh.

DR SOH Alleges that OCBC precipitated the demise of his takeover bid

OCBC's corporate finance team was then acting for him in a $117 million bid for the Catalist-listed company. Dr Soh alleged that the bank, knowing that the bid would likely not succeed, caused its brokerage arm to sell the shares on the open market on April 1, which 'precipitated the demise of the offer', according to court documents filed last month in the High Court here. He did not say if OCBC owned the shares, or was selling them on behalf of clients.

In a legal response filed yesterday, OCBC denied the charge and said the allegation was made to 'scandalise and embarrass OCBC rather than to introduce any true or relevant pleading'. It added that it reserved the right to strike out the relevant paragraphs, and denied that it was to blame for the collapse of the takeover.

Last November, the bank sued Dr Soh for allegedly misleading them into acting for him to mount a takeover of the Catalist-listed company in March last year.

In its statement of claims, OCBC said then that Dr Soh had 'no intention of making a genuine takeover of Jade'. The offer was instead a scheme 'devised to support or ramp up the price of Jade shares' and had been launched 'on a completely false basis as to the level of (his) shareholdings in Jade and the source of funds for the completion of the offer'.

In Dr Soh's defence and counterclaim, he argued that 'had it not been for gross neglect and/or breaches of its contractual obligation . . . and/or breaches of the takeover code by (OCBC), the offer would not have been made'.

The convoluted saga began in February, when Dr Soh launched an offer for Jade at 22.5 cents a share for the shares he did not then own, valuing the company at about $117 million. OCBC, as his financial adviser, guaranteed that he had the funds to go through with full acceptances of the offer and declared then that Dr Soh owned about 46 per cent of the company.

It later emerged that Dr Soh had pledged a substantial portion of his Jade shares to an Australian brokerage, Opes Prime, as margin for loans. When Opes collapsed late in March, its creditor Merrill Lynch seized the Jade shares and sold about 95 million of them on Apr 1 - the same day, allegedly, as OCBC Securities.

The next day, OCBC's corporate finance team discharged itself. Trading in the stock was halted that day and Dr Soh eventually withdrew the offer on Apr 5.

OCBC on Apr 9 reported the matter to the Commercial Affairs Department , which is still investigating. The bank said later that Dr Soh had provided it with forged documents as proof of funds, in particular, letters of guarantee for US$100 million from Standard Chartered Bank in Jakarta.

Dr Soh is claiming that an associate, Abdul Rahman bin Maarip, a Malaysian, was responsible for securing financing for the bid.

In October, the Securities Industry Council, the takeovers and mergers watchdog, censured Dr Soh for 'multiple and serious breaches' of the non-statutory takeovers code. It said he was 'far too casual' in approaching his obligations as an offeror.

OCBC too was censured for 'serious lapses' which led to 'multiple breaches of the code'. The bank voluntarily abstained from financial advisory work on takeovers for six months from Sept 1 and said it will also donate up to $1 million to 'sponsor education programmes in fraud awareness and detection'.