Four foreign banks operating in Singapore began a lawsuit against Asia Pacific Breweries (APB) on Monday demanding the Tiger beer maker compensate them for losses arising from bogus loans to an ex-APB executive.
The local units of Sumitomo Mitsui, Mizuho, Skandinaviska Enskilda Banken (SEB) and Unicredit claim Chia Teck Leng, former finance manager of APB's Singapore unit, was able to cheat them by virtue of his senior position and APB's weak internal controls.
APB, a joint venture between Singapore conglomerate Fraser & Neave and Dutch brewer Heineken, said in a statement it believed it had a good defence and has instructed its lawyers to vigorously defend the claims.
The bewer said in its 2006 annual report that no provision in the financial statements is considered necessary. An APB spokeswoman did not comment when asked for an update but said all material cash balances had been accounted for.
The High Court hearing is scheduled to run for two months.
Chia was jailed for 42 years in April 2004 for using forged documents to cheat the banks of S$117 million (US$78.5 million) over nearly five years to feed a gambling addiction. About S$35 million of the funds have been recovered, according to local media, in what is Singapore's biggest commercial fraud case.
In their opening statement, SEB's lawyers said Chia's fraudulent conduct was closely connected to the activities he was hired to perform at APB. The company therefore must bear the consequences of the misdeeds of its finance manager.
SEB's lawyers said APB had facilitated Chia's fraud by conducting organised tours of the firm's facilities for the banks involved, and by having APB technicians help set up an SEB Internet foreign exchange trading station in Chia's office. SEB is seeking US$25 million, a lawyer for the Scandinavian bank said. The Straits Times newspaper said Mizuho was seeking US$8 million and Sumitomo Mitsui S$10.3 million. HVB, a unit of Unicredit, is claiming US$32 million.
APB, which made profit before interest and tax of S$254.7 million in its fiscal year ended September 2006, said in a statement that we strongly believe that we have no responsibility to repay loans which were never authorised by us in the first place.
It said it was also the victim of fraud and blamed the banks for their lax procedures.
It is difficult to understand how the banks would allow accounts to be opened with them in our name with forged documents and that the banks would also lend substantial sums without conducting proper due diligence, APB said.
Singapore has legalised casino gaming in a bid to attract Asia's high-rollers. Las Vegas Sands is building a US$5 billion casino-resort in the city-state, while Malaysia's Genting is building a S$3.4 billion complex that will include a Universal theme park.