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Accountant instigated friend to be ‘silent director’ of firms that handled over US$1 million in scam funds

Accountant instigated friend to be ‘silent director’ of firms that handled over US million in scam funds
Accountant instigated friend to be ‘silent director’ of firms that handled over US million in scam funds

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SINGAPORE: A chartered accountant and his friend failed to supervise the companies they helped to incorporate in Singapore, with two firms receiving more than US$1 million in scam proceeds.

Ishan Sharma, 34, admitted on Friday (Jun 14) to instigating his friend, Kandhiban Letchumanansamy, 36, into not exercising due diligence in discharging his duties as a director of two companies, Quartz Resources and Kiora Worldwide. 

Kandhiban failed to supervise the companies’ affairs and to ensure that the firms were not used as vehicles for criminal activity. 

Ishan pleaded guilty to two out of four charges under the Companies Act, while Kandhiban pleaded guilty to one of three charges under the same act. 

The remaining charges will be taken into consideration when both are sentenced on Jul 9. 

Ishan, a chartered accountant, incorporated several companies in 2016 and 2020 to provide corporate secretarial services. He earned about S$20,000 (US$14,777) to S$22,000 a month.

In 2017, Ishan found out that Kandhiban was unemployed and offered him a job for a monthly salary of S$500. 

Kandhiban was required to be listed as a “silent director” of incorporated companies. This meant that he would have nothing to do with the operations or activities of the companies. 

He knew his role was to fulfil the local director requirement and to ensure the companies’ compliance with regulations. Kandhiban agreed to the requirement but relied on Ishan to conduct checks on the companies. 

Between 2019 and 2020, Kandhiban was the listed director of more than 50 companies, as per his arrangement with Ishan.

TWO COMPANIES RECEIVED SCAM FUNDS

The charges both faced were related to two companies, Quartz Resources and Kiora Worldwide, which received more than US$5.3 million over a span of four months, of which about US$1.06 million was traced to scam victims. 

Around June 2019, Ishan was contacted by Rahul, an Indian national who wanted to incorporate a company in Singapore and required a local nominee director. 

Ishan forwarded him a few regulatory forms requesting details and corresponded with Mr Rahul twice before incorporating Quartz Resources, a company purportedly in the business of IT consultation and software development. 

Ishan did not perform thorough checks on Rahul Batra, only doing cursory searches of his name on the internet. He asked Kandhiban to be the nominee director of Quartz Resources and the latter agreed.

Kandhiban understood that he would not be involved in the management and operations of the company. 

The pair met Rahul in person only after Quartz Resources was incorporated on Jun 7, 2019, and Rahul had paid Ishan S$6,000 for the service. The company’s registered address was Ishan’s home address. 

Kandhiban and Rahul were listed as directors, while Ishan was the secretary. 

Between April and July 2020, Quartz Resources received more than US$3.8 million in its three bank accounts. The funds were remitted to other bank accounts in China, Hong Kong, Indonesia, Dubai and Singapore. 

Of this sum, about US$583,460 was traced to five victims in the US who had fallen victim to an official impersonation scam. 

Sometime before November 2019, Ishan was introduced to Wadhawan Suchit, another Indian national who wanted to incorporate a company in Singapore. 

Ishan forwarded the same forms and only performed cursory searches before incorporating Kiora Worldwide on Nov 3, 2019.

Ishan only met Suchit in person after the incorporation and was paid S$6,000 for the service. Kandhiban was again asked to be the nominee director.

Between April and July 2020, more than US$1.5 million was transacted through Kiora Worldwide’s three bank accounts. Of the sum, US$479,601 was traced to three victims in the US who were victims of an official impersonation scam. 

Both Ishan and Kandhiban were represented by lawyers Jasjeet Singh and S S Dhillon, who differentiated their clients’ cases from others where accused persons were “randomly picked” to be directors. 

“This is not a situation whereby a layman on the street incorporates companies on behalf of people,” said Mr Dhillon. 

Kandhiban had operated under the assumption that the business operations would be carried out in a legal manner, while Ishan was a chartered accountant who was in the business of the incorporating companies, said Mr Dhillon. 

According to Ishan, he charged between S$2,000 and $2,500 for corporate secretarial services, and an additional S$3,000 to S$3,500 for providing a nominee director. 

“Unlike other cases where the accused had a completely hands-off approach after being listed as a nominee director, Kandhiban continued to engage in discussions with Ishan with respect to the companies incorporated,” said Mr Dhillon. 

The lawyer added that the accused persons had a long-standing history with incorporating companies and had never been entangled with the law until now. 

Ishan had been a director of three companies and a secretary of others, while Kandhiban had been a director of 77 companies, although only 11 were active. 

“If truth be told, after the present investigations, both of them have been so petrified that they have closed most of the companies, fearing that they will be liable for things which they did not anticipate,” said Mr Dhillon. 

For the offence of failing to discharge duty as a director, an offender may be jailed for up to 12 months or fined up to S$5,000. They may also be disqualified from being a director. 

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