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I asked: Do we have the political will to get it fixed for good?
Third CBT case and it is S$33m gone.
Every case is a case too many for the Law Society to get their profession under control.
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The solution is having ‘CVY’ account by law firms. It requires two signatories to release option money held by law firms to the approved payee.
.What is ‘Cvy’……?
CVY Account definition
Examples of CVY Account in a sentence [in lawinsider.com]
The Customer agrees and acknowledges that the Bank has the right to freeze, suspend or terminate the CVY Account and/or decline to perform any of the Customer’s instructions in respect of the CVY Account in the event the Customer breaches or fails to comply with this Clause 8 in any way and for any reason whatsoever, and in this regard, the Bank shall be released and held harmless and be indemnified and kept indemnified in full by the Customer from and against any and all Losses and Damages.
If the Customer does not accept any addition or amendment to the General Terms or these CVY Additional Terms, the Customer shall discontinue operating the CVY Account(s), and shall promptly close the CVY Account.
The Customer acknowledges that any acceptance by the Bank of Pay-Out Forms submitted by facsimile is subject to the provisions of the Indemnity for Taking and Accepting Instructions by Telex, Facsimile, Email and/or Orally (including by telephone) set out in the account opening booklet for the CVY Account (the “ Indemnity”).
Any deposits into a CVY Account for which a corresponding Pay-In Form (for a conveyancing account) or Payment Details File (for a conveyancing (CPF) account) is not submitted to the Bank in accordance with these CVY Additional Terms shall be considered an erroneous payment into such CVY Account, and the Bank shall reverse the payment and refund the payor, upon the instruction of the Customer.
Withdrawals from a CVY Account shall be in accordance with these CVY Additional Terms and subject to the Rules, as the case may be.
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More information at this link:
Click to access linkclick66dd.pdf
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I wrote to Today newspaper on 13th June 2006, “Option for peace of mind” with recommendations.
My suggestions have fallen on death ears, or could have been consigned into the waste bin of history.
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Option for peace of mind
[My letter in Today Online on 13th June 2006, please see printed copy below]:
Give lawyers’ client choice to place funds with reliable authority for a fee.
Tuesday, June 13, 2006
I refer to “Missing lawyer case shocks CJ” [June 8].
Law Society president Philip Jeyaretnam said there are many options available to tighten controls of clients’ money held by law firms. He would submit his recommendations to the Chief Justice by next month.
As expected, before he could make his submission, the legal profession has expressed concerns that stricter controls could place the smaller law firms at a disadvantage. They forget that no one can have their cake and eat it too. This applies to fixing tighter controls in the administration of other people’s money.
I feel that the client – who deposits huge sums of his money as a security deposit – should have the final say as to what he wants to do with his money and ensure that it is safe.
An option should be given to the client and this is not available in the present system. This is unacceptable. The alleged $10 million of the clients’ money that is missing proves that the present controls of the law profession do not serve the interests of the public adequately.
I would like to suggest that the client should be allowed to place his money with the Law Society [or if not, an appointed responsible authority] if he so chooses.
The Law Society should provide the facility at a reasonable administration fee and have two responsible officers to manage the money and jointly sign the release of funds held in escrow.
I am confident there is sufficient volume of transactions each month for the Law Society to justify setting up such a facility to make it feasible.
I propose that a flat nominal handing fee of $25 be charged to the client for each transaction, whether it is to deposit or withdraw the money from the Law Society’s bank account set up for the purpose.
I doubt anyone will object to paying the S$50 in exchange for peace of mind knowing that his money is safer with the Law Society, rather than leaving it with a dubious “fly-by-night” law firm.
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Engineering firm files police report after S$33 million and lawyer go missing
SINGAPORE — Engineering firm Allied Technologies said on Thursday (May 23) in an exchange filing that it is making a police report. This is after it was told that S$33.4 million from its escrow account may have been paid out under the instruction of a senior lawyer who has since gone missing.
On Wednesday, it received a letter from JLC Advisors — the law firm holding its escrow account — stating that the instruction by its managing partner Jeffrey Ong “might have been unauthorised”.
JLC Advisors said in the letter that it is still investigating and has lodged reports with relevant authorities.
Escrow accounts are a means for solicitors to safe-keep a buyer’s funds during the sale of property. In Singapore, these are used predominantly by solicitors to control the flow of funds during various stages of the transaction.
In response to Allied Technologies’ revelations, SGX RegCo — the regulatory arm of the Singapore Exchange (SGX) — said that it will object to any future appointments of Mr Ong as a director or executive officer of any company listed in Singapore.
Besides Mr Ong’s possible involvement with the missing money, SGX said that he has also resigned, with immediate effect, as the independent director and acting non-executive chairman of Annica Holdings on May 20, citing personal reasons.
SPECIAL AUDIT
In an exchange filing on May 8, the Catalist-listed Allied Technologies said that its auditors had flagged some observations, including the S$33.4 million being held by JLC Advisors.
Based on SGX RegCo’s first notice of compliance issued on May 8, Allied Technologies was required to appoint a special auditor. SGX has now ordered that the special auditor report solely to the regulator its findings from the special audit.
Besides looking into the circumstances leading to Allied Technologies placing its funds with JLC Advisors, SGX also said that the special auditor will have to investigate developments surrounding the missing money.
Allied Technologies said that it has repeatedly demanded that JLC Advisors repay the balance of what is left in its escrow account since March this year.
The precision engineering firm said that the amount to be repaid is really S$33.2 million instead of S$33.4 million as stated in JLC Advisor’s letter to the company.
Besides pointing out that JLC Advisors got the amount incorrect, Allied Technologies claimed that the law firm breached the obligations under the escrow agreement both parties entered into in October 2017.
Allied Technologies said that Mr Ong had “repeatedly” told the firm that JLC Advisors would soon release the funds and never once stated that it was missing or that it had already been paid out.
The engineering firm also asked JLC Advisors to produce documents that show the movement of the escrow funds and to give updates on Mr Ong’s whereabouts.
Other than making a police report, Allied Technologies also reported the case to the Law Society of Singapore and has “commenced legal proceedings”.
The curious case of the missing S$33 million was first reported by The Business Times on Thursday. It also reported that Mr Ong has not been contactable.
The Law Society confirmed to The Straits Times on Thursday that it has intervened in JLC Advisor’s client account because it received information which led it to suspect that a lawyer with the firm was dishonest.
It urged other law firms to send in details of their client’s money that JLC Advisors may be holding.
In an earlier statement to The Straits Times, JLC Advisors said that it was informed of “certain matters” regarding one of its clients’ accounts which the firm was not previously aware of, and that it is a cause of “great concern”.
“We have reported the matter to the police and the Law Society, and are cooperating fully with these authorities to resolve the matter,” it said.
On Wednesday, Allied Technologies announced that it was terminating a planned acquisition of Aik Chuan Construction, a company that builds, develops and manages foreign worker dormitories.
The proposed S$130 million takeover was to be satisfied by S$30 million and S$50 million in cash, with the balance paid through the issue of new Allied Technologies shares.
In 2011, Singapore tightened the laws surrounding how law firms handle clients’ money, after two high-profile cases of rogue lawyers.
In June 2006, lawyer David Rasif made off with about S$11 million of his clients’ money — most of which had been entrusted to him by an American couple who wanted to buy a bungalow off Holland Road. In November 2007, lawyer Zulkifli Mohd Amin ran off with about S$6 million — some of it allegedly from a conveyancing deal. Both men remain at large.
Under the rules, conveyancing monies will have to be held in special accounts, which will be offered by banks appointed by the Ministry of Law. Movement of funds within such an account will also be controlled: For instance, two signatories are required before any money is paid out, while clients will have to state the name of the law firm on the cheque when making payments.
Lawyers who breach the rules could be fined up to S$50,000 or jailed for a maximum of three months.
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Note: [What are the maximum fines and jail sentence for a CBT case of client’s money?]
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Companies Act needs some changes to prevent fraud:
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Amend Companies Act to minimise collusion:
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Tighten regulations to prevent fraud:
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Pay more for fraud detection services:
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Fraud – Option for peace of mind:
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tankoktim 