At a time when media reports are calling attention to large-scale cybercrime schemes such as the Colonial Pipeline attack, in which coordinated actions by multiple individuals result in vast financial losses, it is necessary to remember that lone actors can also carry out massive frauds. Over the years, rogue traders such as Nick Leeson and Jérôme Kerviel and Ponzi masterminds such as Bernard Madoff have shown that individuals, with little or no help, can successfully conduct fraud schemes resulting in millions, even billions, of dollars in losses.
The latest example of such lone-actor fraud schemes may be Ng Yu Zhi, now former managing director at Envy Global Trading Pte Ltd and Envy Asset Management Pte Ltd in Singapore. Since March 2021, Singapore prosecutors have been filing charges against Ng for alleged cheating and fraud in connection with a nickel-trading scheme that raised at least S$1 billion (US$746 million) from investors.
According to prosecutors, Envy Asset Management had deceived investors into lending the firm money between January 2018 and March 2020 to purchase nickel from Australian-listed firm Poseidon Nickel. Although investors were reportedly promised varying returns, averaging 15 per cent over three months, no such commodity trades were made. Prosecutors also said, in seeking bail of S$3 million and electronic tagging for Ng, told the Singapore district court “that the outstanding funds invested with the two firms amounted to at least S$1 billion for the purported financing of nickel trading activities.”
At that time, investigators believed that approximately S$700 million was paid to investors and S$300 million was transferred to Ng’s personal account, but that approximately S$200 million remained unaccounted for. Singapore police also seized assets valued at S$100 million from Ng.
Subsequently, Singapore authorities brought two additional charges against Ng, for fraudulently making false electronic records. One of the charges alleges that Ng made a false record of a US$60 million transfer from Envy Asset Management Trading’s Citibank account to another account in February 2021. The other alleges that Ng made a false record of a combined balance of US$303 million in Envy Asset Management Trading’s Citibank accounts in March 2021.
Ng is now faced with a total of 18 criminal charges involving cheating, fraudulent trading, and forgery. The most recent charges, filed May 17, allege that between September 2020 and January 2021, Ng deceived “seven individuals and companies into buying some receivables from Envy Global Trading’s purported sale of nickel to a firm called Raffemet, but there was no such transaction.”
While the case against Ng has yet to be proved, corporate compliance teams can use the information reported so far in reviewing the scope and coverage of their fraud monitoring and other internal controls. Some internal fraud “red flags”, such as indications of an employee’s living above his or her means, may need to be recalibrated for high-level employees, who have high salaries and greater authority to authorize substantial expenditures and transactions. And the broader that discretion, the greater the need for the company to watch for abuses of that discretion that could lead to substantial company and client losses.
Dipping Through Geometries 