Goh Chok Tong's son wins appeal against ex-company, no longer liable for S$187 million in losses

Goh Jin Hian, the son of former prime minister Goh Chok Tong, has won an appeal against his former company, Inter-Pacific Petroleum (IPP).

IPP had sued Goh, a former director at the fuel supply company, to recover US$146 million (S$187 million) in losses.

They accused him of "sleepwalking through his time as a director" and claimed that he had breached his duty.

In a ruling delivered on Jun. 5, the Court of Appeal overturned a previous ruling, which found that Goh was not entitled to relief from liability.

This means that Goh was no longer liable to pay the S$187 million sum, plus interest, that IPP originally claimed as compensation.

What happened?

Goh was an executive director of IPP between Jun. 28, 2011, and Aug. 12, 2019.

The company operated in two lines of business: cargo trading, and bunker trading.

But it was "used as a vehicle of fraud by its other directors and officers".

In the lead-up to its collapse, IPP had borrowed large sums of money from banks, on the pretence of financing "commercial transactions".

These transactions turned out to be shams. As such, IPP became liable to repay these debts; but it did not receive any benefits or assets in turn.

IPP hence sought compensation from Goh to repay these loans, accusing him of breaches of duty.

It pointed out that Goh had not been aware of IPP's cargo trading business despite being an executive director, and that he could have stopped the fraud if he had known.

In a July 2024 judgment, High Court judge Aedit Abdullah allowed IPP's claims.

He held that Goh was liable to pay US$146 million in compensation to IPP "in respect of his breaches of duty".

"The fraudsters were only able to run amok in IPP’s cargo trading business because Dr Goh had known nothing of it," he found.

The appeal

In allowing the appeal, Justice Kannan Ramesh acknowledged that a director should not be a "mere sentinel who... occasionally dozes off at his post".

"However, it does not follow that where a director has fallen asleep at the wheel, any or all losses occasioned to the company during the slumber should be vested on the director," he said.

While he acknowledged that Goh had breached his duty in his ignorance of the cargo trading business, he said IPP failed to prove had Goh been aware of the cargo trading business, he would have been able to stop the fraud.

In other words, it was not proven that Goh's breaches of duty had caused the losses, he found.

"This is a case of a deep-seated fraud. It does not follow that if Dr Goh had been aware of the cargo trading business, he would have discovered the fraud and thereby put a stop to it," he added.

"It cannot be part of a director’s duty of supervision and oversight to pick up fraud unless there are tell-tale or warning signs.

A director may be a sentinel, but he is not a forensics investigator or a sleuth, unless there are signs that would put him on inquiry."

Top image from Shin Min Daily News