SINGAPORE — In a significant twist, former Inter-Pacific Petroleum (IPP) director Goh Jin Hian has emerged victorious in the Court of Appeal, which on 5 June 2024 overturned a previous ruling that mandated him to pay US$146 million (S$187 million) for the company’s losses. This decision marks a critical clarification regarding directors’ duties in corporate governance.
The Background
Goh, who is also the son of former Prime Minister Goh Chok Tong, had been found liable for breaching his duty of care during his tenure at IPP, a now-insolvent marine fuel supplier. The earlier judgment stated that Goh failed to adequately address certain warning signs that suggested IPP was being defrauded, particularly in relation to significant trade financing drawdowns.
Ccourt’s Findings
In a detailed ruling delivered by Justice Kannan Ramesh, the Appellate Division of the High Court clarified that while Goh had indeed breached his supervisory duties, the prosecution failed to establish that these breaches directly caused IPP’s financial losses. The court noted that:
- Goh’s ignorance of the company’s cargo trading aspects did not amount to a direct cause of the loss incurred by IPP.
- The three alleged “red flags” cited by IPP were insufficient to trigger an inquiry into potential fraud.
- There was no evidence suggesting that further diligence on Goh’s part would have uncovered the fraud.
Implications for Corporate Governance
Senior Counsel Thio Shen Yi, who represented Goh, highlighted the decision as pivotal in understanding the limits of directors’ responsibilities. He stated, “This is not just about Dr Goh; it has broader implications for all directors in terms of navigating their fiduciary duties amid complex corporate realities.” The court’s ruling furnished important insights into the boundaries of due diligence expected from company directors.
Future Challenges
Despite this legal victory, Goh still faces a slew of 39 criminal charges related to false trading while serving as CEO of New Silkroutes Group, which he was charged with in September 2023. As such, while the civil battle may have concluded in his favour, Goh’s legal challenges are far from over.
This case underscores the complexities inherent in corporate oversight and the critical need for directors to be aware of their responsibilities without being burdened by the expectation to act as forensic auditors.