By Chan Quan Min
1Malaysia Development Bhd’s (1MDB) choice of a little-known Hong Kong firm to manage RM7.18 billion in funds parked in the Cayman Islands is called into question as new information on the involvement of a convicted swindler comes to light.
Documents sighted by KiniBiz reveal dealings between Singapore Ponzi king James Phang Wah and Hong Kong based Bridge Partners, fund manager to 1MDB’s Cayman Islands billions.
For a few short years Phang operated perhaps Singapore’s largest Ponzi scheme, amassing S$180 million (RM460 million) in investors’ funds after falsely promising to, as reported by The Straits Times (Singapore) in October 2007, “acquire companies like you go to market buying beancurd.”
In reality, Phang rarely used the money for its stated purpose. He compared himself to Warren Buffet but was more like Bernie Madoff, paying investors who were cashing out of the scheme from the same pot joining investors contributed into.
His scheme, operated under the guise of a multi-level marketing company called Sunshine Empire, put him behind bars in 2009 under charges of fraudulent trading, falsification of accounts and criminal breach of trust.
The involvement of Phang with Bridge Partners, however, is through another company 75% beneficially owned by Phang, the Cayman Islands incorporated Emcom International (now known as Bingo Group).
James Phang
The event that establishes a connection between Phang and Bridge Partners, is a May 2008 agreement for Emcom to buy-out Bridge Partners from owners Lobo Lee Kwok Ning and Lin Wai Yan for HK$180 million (RM75 million).
As part of the agreement, Emcom asked to change its name to Bridge Partners Holdings once the deal was completed. However, the deal was never completed because the relevant resolutions did not pass in a shareholders’ meeting.
Information on Bridge Partners is scant. The company began taking down from its website the profiles of its directors last week after it made the headlines as 1MDB’s fund manager.
1MDB reluctant to divulge
The fund manager for 1MDB’s Cayman Islands billions was first named in a Business Times (Singapore) report quoting unnamed sources.
Until then, the only clue to the identity of the fund manager was a note in 1MDB’s 2013 audited accounts describing it as a “licensed financial institution with good credit ratings.”
Little-known Bridge Partners, the named fund manager based in Hong Kong, is allegedly holding the funds in a segregated portfolio company (SPC) in the Caymans called Bridge Global Absolute Return Fund.
The investment into the financial product is yielding a low return of 5.76%, below the fixed return of 8.67% earned by the same tranche of funds in its previous life as a loan to mysterious PetroSaudi.
1MDB directors were forced to admit that they had no control over the Cayman Island funds in the company’s 2013 audited accounts as the investment was made, to put it simply, in an off-the-shelf financial instrument.
For a list of stories based on the company’s 2013 audited accounts, visit this link.
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