FINANCIAL FORENSICS & CONSULTANCY

STRIX STRATEGIES

ABOUT US CASES

AREAS OF PRACTICE

Financial Due Diligence • Forensics Accounting • Expert Witness for Financial Cases • Business & Matrimonial Pool Valuation & Evaluation • Financial Consultancy

TEAM

Wan Yew Fai

CA (Singapore), CPA (Australia)

• FCA (Singapore), CPA (Australia), ASEAN CA
• Appointed Expert Witness in over 30 cases of litigation
• Case Consultant with numerous law firms over the past 20 years
• Provided Court-approved Valuations of multiple businesses
• Experience in managing a commercial business for 15 years
• Lectured in financial institutions of higher learning
• Asia-Pacific Regional Auditor for US Government USAID program

Edward Ta

FCA (Singapore)

• Regional Controller for Cargill – Managed 7 financial controllers
• Business Accounting and Compliance Systems Integration
• Oversaw Tax and Compliance issues in 6 countries
• Experience with cases involving financial claims litigation
• Profitable assessment, purchase and sale of international distressed assets

CASE EXPERIENCE

TDS vs TDT Divorce No. 4628 of 2011 and SGCA (2016)

Hired as expert to prepare three reports for wife’s side including rebuttals against another expert for a matrimonial case.
Selected quotes from the judgements:-
“The report given by Mr Wan Yew Fai of Strix Strategies Pte Ltd (“Strix report”) was sound and persuasive in pointing out the weaknesses in the report submitted (by the opposing expert)”. – Debbie Ong JC
“We find that the appropriate valuation … is the Strix report which valued BSPL at $830,849” – Court of Appeal – Judge of Appeal Andrew Phang, Judge Judith Prakash and Judge Quentin Loh Judge
As part of the case, valuations of five companies (involving also three immovable properties) in the matrimonial pool were made. Court of Appeal upheld Strix’s valuation of every company without exception and used these values as a basis to apportion he appropriate sum to the wife ($955,000) in the ancillary matters.
The four companies were:- APL - $2,139,853 BPL – $152,928 BSPL – $830,849 CPL – $42,073 DPL - $Nil

Husband’s expert valued APL as Nil because it made cumulative losses over the years but we noted that the losses made were not based on audited accounts and reconstructed the financials to show that if one takes into consideration supported, significant transactions (e.g. gain in sale of property) and disregard the questionable ones that was purposely made to reduce the assets of the company, the value would have been $2,139,853. The judge and the Court of Appeal accepted this value.
Husband also presented a case whereby the beneficial owner of a certain property was not BSPL but was himself through an inheritance from his father. However, our examination showed that not only was BSPL the registered holder, the company paid the mortgage against the property and therefore BSPL was both the legal and beneficial owner. The Court of Appeal used our valuation of the company at $830,349 and placed it into the matrimonial pool of assets. This sum included an adjustment for cost of the property and its increased market value from the time it was purchased.

WA22 NCC 278 07/2018 - Malaysian High Court

This case was tried in the Malaysian High Court. We were hired by a distributor to prepare a statement of monthly loss due to early termination by a principal. With early termination, the distributor suffered loss of profit. After trial and after being cross-examined by Skrine, The Malaysian High Court Judge Balan made a judgement in the favor of the distributor and accepted the calculations (without any exception or revision) by awarding a 3-month compensation based on the calculated net monthly loss.

To arrive at the potential loss, projections based on past years’ financials were prepared. And with the decrease sales volume, we identified specific expense categories that had to be adjusted so that a fair presentation of the situation would be made.

USA vs USB Divorce (Transferred) No 3278 of 2016 and (2020) SGCA 57

This case involved the divorce of a property agent wife who owned 17 properties and her husband who was a lawyer. The dispute centred on the value of the matrimonial properties and which of those should be considered a matrimonial or non-matrimonial asset. We were hired to examine and respond to the report issued by the wife’s expert.

We reported that the opposing side’s Accountant’s Report only presented a cashflow situation of the wife and transactions that led to her overdraft build up but did not address the main issue, that is, the valuation of the assets based on a net tangible asset (NTA) method. In the end, all calculations were made based on the NTA method.

Anonymous A (Discovery and Interrogatories)

Husband stated in his AOM that the matrimonial pool decreased because he made a $3 million investment as a 49% shareholder in an overseas resort. This was done through a company which owned the resort and this company used the funds for upgrading.Later, he stated that the resort could not open because the builder abandoned the project and cheated the company and therefore, his investment has been wiped out.

We made a special effort, travelled to this overseas location and did extensive searches on the company that owned the resort. As it turned out, in the entire duration, husband was never a registered shareholder of the company and his “investment” funds went directly to the director of this overseas company. Our trip report noted that the renovations were in full swing and the resort was almost completed. With fore-knowledge, we assisted the instructing lawyer in the discovery and interrogatories process by setting trap questions knowing what the opposing side would answer but also knowing that we have documentary proof that the answers provided would be untrue.

Anonymous B (Valuation and Trust Law)

Ex-husband intended to claim a share of the $2mil proceeds from an en-bloc sale by showing that his ex-wife was only holding the property for him in trust based on a trust agreement previously signed. Wife’s position was that while she signed the document, the terms of the trust agreement was broken.

The report provides evidence on how the cash contributions toward the property were all attributed to her. It also provided evidence of how she had frantically tried to source of funds to make mortgage payments when her ex-husband could not come up with the installments. In effect, our report refuted the trust document that the husband had prepared alleging that the wife was holding the property on trust for him. In the end no legal suit was filed.

Anonymous C (Fraud discovery and pursuit)

Assisted in a case whereby a family member who had control of the accounts was siphoning money off for herself, taking advantage of the founders who had placed trust in this accountant. The case led to an initial judgment sum of $4 million. Another judgment sum of $2 million was later secured against another family member in cahoots with her.

There was no report was necessary. Instead, we compiled and verified the fraudulent transactions to substantiate counsel’s Order 14 application which led to the judgement sums obtained. The case presentation showed numerous transactions where the supposed payee in the supporting documents differed from what was written on the payment voucher which also differed from what was written on the cheque. The account which the charges were supposed to be made was also different from the account that was actually charged to. This created a massive errors in accounting which made it very difficult to check and detect the fraudulent activities that were taking place.

Anonymous D (Discovery, Hidden Assets, Valuation and Working with Private Investigator)

Husband submitted that his net assets were $1.7million in his first AOM. After examining the underlying documents and re-valuing the list we arrived at a valuation between $2.5million to $4mil. The case was successfully mediated.

Private Investigator discovered that husband was collecting cash and closing the shutters for a business owned by his mistress. We arranged to purchase items from this shop and found that money was wired to a company that was owned by him thereby establishing the prima facie fact that although he was not the legal owner, he was the beneficial owner. This effort contributed toward the valuation increase in the matrimonial pool.

Anonymous E (Hidden Assets)

Husband is an expat in Singapore. Wife is in Europe and has filed for a divorce there. Husband submits that he has no financial resources and means to make payments to her and we conducted searches to find out about the assets he owns in Singapore. We found he has substantial wealth in Singapore and this information is now used in European courts to debunk the husband’s claims.

Through information obtained through searches and observations, we found that he owns two companies that collectively paid him dividends amounting to $3.8 mil. He in turn used a large part of it to pay the down payment an office space which he purchased for $7mil. This was information that foreign lawyers would find useful but for them, it is difficult to obtain and analyze.

Anonymous F (Siphoning of funds and Minority Oppression)

Client is a minority shareholder in a well-established bar and restaurant. He came to us expressing concern that he could not figure out why his F&B business was not doing well when the outlet had posted excellent sales figures. We made a very quick analysis and got back to him on the reasons, quantified them and he eventually decided settle the matter out of court as he realized that he should not continue a business with such partners.

Through financial analysis, market knowledge, observations and interviews with the client, we found that the majority shareholder owned a management company that charged this outlet exorbitant management fees. In addition, and probably more damaging, was the fact that promotional funds for liquor suppliers were taken by the management company and my client’s outlet never enjoyed these cash rebates no matter how much liquor they sold.

Anonymous G (Asset Dissipation)

Husband submitted Accountant’s Report that stated the financial position of the business that was jointly-owned with the wife. We analyzed it and realized it was depleted by $2mil of expenses without much basis.

Assisted Husband’s counsel to run a line of questioning that managed to convince the judge during cross-examination about how the accounts were not reliable. Judge spoke to the Husband and said “You know, I have some difficulty accepting your evidence here. Your own accountant has confirmed that you expended S$2mil in business expenses yet you say you only entertained your clients and friends at hawker centres. S$2m is many plates of Char Kway Teow and Coca-Cola, you know?” Eventually, the court made an award to the Wife amounting to $700,000.

Anonymous H (Inherittance and Business Valuation)

Mother bequeathed the company’s shares to Son but the value of company as reflected in the financial statements was low. We were granted access to the accounts in a room full of the company’s files and in 4 hours we found that substantial portions of income was not recorded. We reconstructed a range of possibilities and presented to the Son. However, Son decided not to proceed based on commercial reasons in that he did not want the rest of the inheritance to be put at risk to fight this case.

Even though there was no follow-up and the case did not go to trial, the Son at least could get closure on the matter and could make his decision based on a quantified analysis and not living the rest of his life thinking about the value he gave up.

Anonymous I (Minority Oppression and Round Tripping)

Client shared a family business with his siblings and disagreement surfaced when funds were given to other family members against his wishes. Eventually, client, the loudest protestor, found himself excluded from the business through a series of corporate actions. Other siblings who were in control engaged in several round tripping exercises thereby depleting client of his monetary assets. This case was mediated and settled.

Working with documents provided by client and the instructing solicitor, we managed to piece together the transactions that showed strong evidence of round tripping and a scheme to deplete client's resources. This led him to have a stronger hand going into mediation and eventually settled for a sum of about 20% more than what client thought he would get.

Swee Wan Enterprises Pte Ltd & Swee Wan Trading Pte Ltd vs Yak Puay Khim, Yak Eng Hwee & Yak Eng Siong (Suits 235 and 236 of 2014) – Misappropriation of Funds

Engaged to prepare a report on the investigation findings relating to the accounting records of a group of family-held companies and the actions of the 3 defendants in the case Suits 235 and 236 of 2014. Our work resulted in a settlement agreement favourable to our client and also in a conviction one of the three persons.

Working through thousands of pages of documents, our work aided in obtaining a summary judgement of $4.1mil against one defendant – the bookkeeper. This matter was reported to CAD for misappropriation of funds and the bookkeeper was sentenced to 8 years imprisonment. The settlement agreement also required the other 2 parties to pay $600,000. (See paragraphs 19, 21, 23, 127, 128 of a judgement in related suit – [2019] SGHC 149 by Justice Hoo Sheau Ping).

WPN vs WPO [2023] SGHCF 38 – Divorce and Valuation of Start Ups and Crypto Assets

Hired as expert for the husband to value the five companies he owned. This exercise was a unique one because it involved mostly start-up companies and crypto currency holdings. The dispute arose because there were significant differences between our valuation and the valuation presented by the wife’s expert.

Under the Grounds of Decision, Justice M L Kwek preferred the valuation done by Strix over the other expert (OE) for every company in question, stating:
Valuation of B – “Comparing the valuations of Strix and (OE), I found Strix’s valuation to be more logical and consistent. I hence adopted S$0.06246 as the value of each [B] share and added S$8,136,884 to the pool of MAs for the Husband’s 130,272,727 shares.” (Para 69)
Valuation of C - “I found Strix’s critique of (OE)’s 15% uplift to be logical and cogent. I hence rejected (OE)’s highpoint and midpoint valuations and adopted Strix’s valuation … which is at S$5,696,226 ….” (Para 74). For the valuation of share options in C - “I hence found that on balance, Strix’s analysis was more logical and consistent. I thus adopted Strix’s valuation of S$206,628.19…for the Husband’s 22m [C] share options.”
Valuation of D - “On balance, I accepted Strix’s observation that (OE)’s highpoint valuation lacked a robust basis. I … found Strix’s valuation … to be based on a more logical and consistent analysis. I hence adopted Strix’s valuation … at S$1,496,177.28.”
Valuation of E - “On balance, I found Strix’s valuation … to be more logical and consistent. Consequently, I adopted Strix’s valuation of the Husband’s 63 [E] shares, at S$91,300.”
Valuation of F – “On balance, I found Strix’s analysis to be more logical. I accepted Strix’s point that there was a large overhanging volume of cryptocurrency tokens and that the sudden injection of 1.3 billion cryptocurrency tokens into the market could affect the pricing of the cryptocurrency tokens on the day of sale. On the whole, I found Strix’s analysis on the valuation of [F] to be more logical and consistent than (OE)’s. I hence adopted Strix’s valuation. Accordingly, I valued the Husband’s 500 shares in [F] at S$2,082,637."

WGE vs WGF [2023] SGHCF 26 – Divorce and Valuation

Hired as expert for the wife to value a company owned by the husband. There was a significant difference between our valuation and the valuation presented by the husband’s expert. The primary areas of dispute revolve around the valuation methodology - assets that were included as part of the assessment and derivations of the application of discounts – Discount for Lack of Control and Marketability (DLOC and DLOM).

Under the Grounds of Decision, the District Judge applied DLOC and DLOM which was different from our determination. However, upon appeal, the Appeal Judge, Justice Mavis Chionh overturned the DJ’s decision in our favour.
Justice Mavis Chionh, “However, for the reasons explained earlier, I am of the view that the DJ erred in his application of the DLOM and DLOC. In this regard, it is Mr Wan’s methodology and reasoning that I adopt: I accept Mr Wan’s proposal to apply a 30% DLOM and 25% DLOC under the income approach, and to refrain from applying any DLOM and DLOC under the market approach. I also accept that Mr Wan was correct to make the excess cash adjustment in his latest valuation.”
As a result, from the original $126K valuation made by the husband’s expert, the eventual valuation of determined by Justice Chionh was almost 6 times more at $754K.

[2023] SGHC 152 – Special Accountant relating to Abuse of Process

Hired as a special accountant for the Defendants to examine the books of the company in question – Gokul Restaurant Pte Ltd. The Plaintiff applied to wind up Gokul Restaurant (under HC/CWU 198/2021) and we aided the Defendants to identify various incidents which pointed towards abuse of process.

Our work examined and presented the financial situation faced by the company, the timeline of how events unfolded, how food licenses were transferred, and how other proceedings that disadvantaged the Defendant. After examination of all the evidence, including significantly what we presented, Justice Andrew Ang concluded that the “[Plaintiff] is not entitled unilaterally to adjudicate their truth, fashion her own remedy against Mdm Rajeswary [the Defendant, our client], and expect this court to rubber stamp the execution thereof." Accordingly, he dismissed the winding up application as an “abuse of process”, and as a result, our client successfully managed to preserve the company in question.

Anonymous J (Dispute relating to sum owing from loans, interest and penalty interest)

Hired as experts to represent the Defendant in a dispute that arose. Plaintiff sued the Defendant, our client, for a $3mil sum for loans, interest and penalty interest. We were hired to establish the amount actual amount owing.

In our report tendered to court, we recomputed the amount owing and found that there were many discrepancies resulting from the calculations of even the capital amount. The main discrepancies were double counting, double counting of GST and, errors in loan start and end dates. As for the interest portion, we found backdated interest on loans that had already been settled, backdated loan agreements, and inconsistent application of interest percentage. The case was settled 3 days before trial at a sum of very close to the Defendant’s Offer to Settle at $1.4mil, less than half the amount claimed.

Anonymous K (Questionable existence of a liability)

Hired as experts to represent the wife in a dispute over the matrimonial pool sum. The main dispute centred around a loan which the husband allegedly owed a third party passive investor because the passive investor had allegedly deposited funds with the husband for investment on the third party’s behalf, and now, the husband “owes” this passive investor $5mil. The husband submitted that $5mil is therefore a liability and needs to be deducted from the matrimonial pool.

By way of the our involvement in the discovery process and through a forensic analysis by examining the history surrounding the “investment”, the conduct of each party and, the study of contemporaneous documents, we concluded that the it was highly unlikely that the liability of $5mil existed. The court agreed with us and in its oral judgement determined that “the Debt falls away”. As the wife was awarded 35% of the matrimonial pool, our efforts yielded the wife an extra $1.8 mil.

Anonymous L (Round tripping to transfer ownership to others)

Hired as experts to represent the a family member who wanted to exit from a his family’s group of companies, but a dispute arose over the value his shares. The main dispute centred around valuation of these companies and balances which the family group of companies owed this exiting family member.

By way of the our involvement in the discovery process, company searches, assistance from our client and through forensic analysis, we found that not only were the valuations of the companies understated, the balances owing to our client were reduced and stripped out through a series of round-tripping transactions that masked and wrongly transferred the balances to other parties. The loss suffered by our client through these round-tripping transactions alone came to $1mil. Unsurprisingly, the offer made to our client as his buyout sum was also $1mil. After this proposed offer was made, we attended mediation and spoke with the mediator (who was also a judge) about the series of irregularities we found. At the end of that evening, our client walked away with a favourable settlement valued at $5mil - an amount significantly more than what even he envisaged he would get.

Anonymous M (Divorce and Converting Company Funds to Personal Funds)

Hired as experts to represent a husband in a divorce. Having been a long marriage, the wife wanted 50% of the matrimonial pool. The main dispute centred around the valuation of the husband’s practice (of which he was the sole-practitioner and she co-owned this practice with him) and, certain transactions and transfers that were executed by the wife when she was an accountant in his practice.

We found that the wife had placed an unrealistically high value on the husband’s practice. Upon our examination of the company accounts and her personal accounts, we discovered that she was depleting the company’s funds, having transferred co-owned company funds to her personal account as her own personal assets. These amounted to about $4mil. When we adjusted the valuation of the company to realistic levels, the case was settled at mediation (when all the facts were presented) and the husband saved $5mil in alimony payments.

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