By: John Berthelsen

A three-year corporate squabble between the Tokyo-based financial conglomerate J Trust Pte Ltd. and onetime Thai stock exchange darling Group Lease Thailand has now moved into Cambodia, with Group Lease’s embattled former chairman and CEO, Mitsuji Konoshita filing a complaint with Cambodian authorities and demanding the arrest and detention of J Trust officials.

According to the complaint, filed on April 1, Konoshita alleged that Nobuyoshi Fujisawa, the flamboyant president of J Trust, Nobiru Adachi, another J Trust director and legal guru, and a British accountant named Gwynn David Nevill Hopkins, the president of a Hong Kong firm called Saronic Holding Ltd., colluded to take control illegally of a company named Pacific Opportunities Holdings SARL in Luxembourg and “cease the operations of two other companies, Cougar Pacific Pte Ltd and Kuga Reflorestamento Ltda.”

John Christopher Dobby of Hogan Lovells Hong Kong and Ian Mann of Harney’s Hong Kong are advising Saronic and Fujisawa on the Pacific Opportunities seizure which was arranged by a Cambodian national known as Tep Rithvit. Tep is known as the Secretary General of the Tennis Federation of Cambodia and was arrested in Cambodia but released by senior political officials and is believed to have fled the country with his family.

No other details are given in the complaint. However, none of the three J Trust officials are in Cambodia and it doesn’t appear likely that they will be.  The corporate feud, playing itself out in lawsuits in Thailand, Cyprus, the British Virgin Islands, threatens to cost J Trust as much as US$250 million.

Group Lease was a Thai investor favorite until February 2017 when the hire purchase firm’s auditors mistakenly alleged massive amounts of audit fraud. In November 2017, the Thai Securities and Exchange Commission and the Stock Exchange cracked down, charging the company and temporarily suspended its shares from trading. At that point, Mitsuji Konoshita, the CEO, left the country and hasn’t been back, leaving his brother Tatsuya and trusted CFO, Alain Dufes, holding the bag.

The two entities were closely intertwined until the SET’s action, whereupon J Trust filed a civil complaint seeking US$257 million in compensation from Konoshita and the other directors and later filed a petition for reorganization of Group Lease, seeking to freeze the organization’s financial activity.

It later filed a criminal complaint against Konoshita and other officials as well as filing a plethora of legal actions in Singapore against a flock of companies apparently affiliated with Group Lease including Cougar Pacific, Aref Holdings, Adalene Ltd., Bellaven Ltd – all incorporated in Cyprus.  J Trust has continued to chase Konoshita’s holdings in the British Virgin Islands, Japan and Cyprus.

Thus it appears that J Trust’s illegal takeover of Cougar Pacific and Kuga Reflorestamento in Cambodia, which the Cambodian government has branded as illegal, stem from the Japanese financial concern’s attempts to reclaim funds it maintains were stolen in Thailand. 

On its website, J Trust announced recently at the end of March that “in 2019, we plan to enter the Cambodian market, having announced the acquisition of 55 percent of shares in Cambodian commercial bank ANZ Royal Bank in May of 2018. In this way, J Trust strives to be a company that “provides financial services unconstrained by existing paradigms.”

Fujisawa’s and Adachi’s orders for detention by the Office of the Prosecutor of Phnom Penh Court of First Instance in Cambodia may scupper ANZ Bank Australia’s plan to sell 55 percent of ANZ Royal to JTrust.

There is no indication on the J Trust website of its attempts to take control of Cougar Pacific and Kuga. However, J Trust is having plenty of problems of its own across Asia. Although Vietnamese press reports say it is on the verge of taking over Vietnam’s Construction Bank, there is no mention on its website. And, according to the website, the conglomerate is down to just US$1.9 million in unrestricted capital, making it questionable what cash resources it can access to buy the Vietnamese bank.

J Trust Group’s share price has been on an inexorable downward path since May 1, 2013, when it peaked at ¥4057 (US$35.40) to its April 12, 2019 level of 363, a remarkable 91.05 percent decline from its zenith reached just before its famous Rights Offering of ¥97,682 billion/US$988 million in July 2013.

Major shareholders, many of which have bailed out, originally included the Kirkland, Washington-based Taiyo Pacific Funds LLP, whose former chief investment officer was Wilbur Ross, President Donald Trump’s commerce secretary. Others are Vanguard, BlackRock, Dimensional Fund Advisers and State Street, all primarily index funds. The California Public Employees Retirement System, or Calpers, was also brought in by Taiyo Pacific along with Invesco, Taiyo’s ultimate parent, but Calpers is down to a holding of less than US$650,000 while Taiyo Funds itself cut its holdings of J Trust by 1,121,000 shares, reported by Bloomberg in October. As of today’s close, J Trust is trading at a year low with its market capitalization of US$365.1 million only US$20 million above Group Lease market cap of US$344.6 million.

J Trust faces more than US$1 billion in lawsuits in several countries over its operations and has run into financial difficulty with several of its units. The group has invested as much as US$260.5 million since December 2014 in Bank Mutiara, formerly known as Bank Century and owned by Robert Tantular, who was jailed after it collapsed in 2008. The bank is widely believed in Jakarta to have been the repository of slush funds held for the Democratic Party, led by former President Susilo Bambang Yudhoyono. Tantular was quietly freed in July after having served half of his term, raising speculation of political interference. The KPK revoked his travel privileges in December when they discovered his mysterious release.

According to Fujisawa’s third-quarter presentation, J Trust Japan also took a massive loss on Highlights Entertainment Ltd., a games machine manufacturer, discontinuing its operations, which resulted in a loss of ¥2.8 billion (US$25.2 million). It was also forced to abandon another acquisition, Keyholder Inc., a company that installed and sold imported entertaining devices. According to a public statement, Keyholder was transformed into a holding company, partly sold to Fujisawa personally and “moved to a phase towards establishing new pillars of profit drivers such as considering the start of the live entertainment business” and promoting K-Pop idols.

Other troubled operations include JTrust Investments Indonesia, the receptacle company for Bank JTrust bad loans in Jakarta. JTrust Investments Indonesia has allegedly acquired over US$300 million of nonperforming loans from the bank since October 2015. Published third-quarter 2019 figures show JTrust Investments Indonesia had a negative net worth of an astonishing ¥7605 million (negative US$69.4 million), wiping out JTrust Asia’s original investment of US$4 million and US$12 million in loans JTrust Investments Indonesia has with JTrust Asia.

Market reports say J Trust will be hamstrung by litigation indefinitely and by legal cost burn rates that appear to be running at levels exceeding US$30 million annually, according to the earnings presentation, with no end in sight.