SINGAPORE – UOB has won an appeal against an Indonesian developer over losses and damages it suffered from disbursing about $182 million in inflated home loans, but its claim on deceit by the firm was rejected.
The Appellate Division of the High Court found that Lippo Marina Collection (LMC), a unit of Indonesia’s Lippo Group, had used unlawful means in a conspiracy with real estate agents to sell properties to be financed by UOB.
The conspiracy resulted in UOB losing a large amount of money after it financed more than 100 per cent of the purchase prices of high-end apartments.
The amount of damages LMC will have to pay UOB will be determined at a later stage.
The long legal battle began in 2014 and concluded in May this year.
In a judgment released in June, High Court judge Aedit Abdullah had dismissed all of UOB’s claims against LMC, although the bank succeeded in its allegations of misrepresentations against the second and third defendants – property agents Goh Buck Lim, also known as Rick, and Aurellia Ho.
UOB had accused LMC of conspiring with Goh and Ho to obtain financing from the banks so that LMC could dispose of its 38 units at the Marina Collection in the face of difficult market conditions.
The 124-unit Marina Collection in Sentosa Cove was launched for sale in late 2007, but only 42 units were sold by March 10, 2011, after a series of cooling measures were introduced.
UOB disbursed about $182 million in mortgages between December 2011 and September 2013 to purported purchasers of 38 units in the condominium developed and sold by LMC.
By April 2015, all 38 buyers had defaulted on their loans.
The courts had heard that LMC gave substantial “furniture rebates” of 22 per cent to 34 per cent that were used to offset cash payments required for the condo purchases.
The furniture rebates, which were not disclosed to UOB, inflated the prices of individual properties in Option to Purchase forms by the amounts of the rebate.
Besides the concealing the furniture rebates, the defendants also concealed the true identities of the purchasers.
It was later revealed that 32 of the 38 purchasers were nominees or fronts for four investors based in Indonesia. Only six were the intended beneficial owners of the units.
The appellate court noted in its judgment released on Oct 28 that the sheer magnitude of the furniture rebates suggested that it was not a genuine rebate.
For example, a furniture rebate of $2.39 million was granted for each of the last three units sold, which amounted to around 52.6 per cent of the $4.54 million actual purchase price.
The purchase price stated in the Option to Purchase forms was $6.931 million. UOB granted $5 million in housing loans for each of the three units.
Banks can only lend up to 80 per cent of the purchase price (or current market valuation, whichever is lower) of a residential property.
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