Cambodian Officials Charge Japanese Executives with Fraud

Cambodia’s state prosecutor in Phnom Penh has filed criminal fraud charges against three officials of the Japanese financial conglomerate J Trust Asia Pte Ltd. on charges of having conspired to take over the shares of the Cambodia-based Pacific Opportunities Holdings, which is affiliated with the Group Lease Thailand hire-purchase firm.

The three are Nobuyoshi Fujisawa (above), the president of J Trust, Nobiru Adachi, another J Trust director and legal adviser, and a British accountant named Glynn David Nevill Hopkins, the president of a Hong Kong-based firm named Saronic Holding, Ltd.

J Trust Asia’s parent, the Tokyo-based J Trust Ltd, has been in a bitter three-year corporate dispute that culminated April 1 with Group Lease’s embattled former chairman and CEO, Mitsuji Konoshita, filing a complaint with Cambodian authorities and demanding the arrest and detention of the J Trust officials, as well as Thep Rithivit, the secretary general of the Cambodian Tennis Federation. The feud, playing itself out in lawsuits in Thailand, Cyprus, the British Virgin Islands and Singapore, threatens to cost J Trust as much as US$260 million.

Wedge Holdings, Group Lease’s Japan parent, in a prepared release charged that the J Trust officials’ “fraud actions are extended over client companies of GLH and interrupted its collection of debt from the clients. And our company also considers that those suspects and J Trust is interrupting the lawsuits against JTA and debt collection with bad faith.”

Wedge Holdings called the indictment a “further step forward in both of the lawsuit and the debt collection process” and said it would seek compensation for the damages in Singapore, Japan, Thailand, Cambodia, Hong Kong and other countries.

The criminal fraud complaint, filed on April 1, which was translated from Cambodian and made available to Asia Sentinel, is based on Konoshita’s complaint. It is sketchy at best, saying only that the three “together machinated to take all 100 percent shares of POH to be their ownership, in which the three persons have created the company named Saronic Holding Ltd. to take all 100 percent shares of POH. The three persons cooperated to manage and to frustrate the activities of two subsidiaries named Cougar Pacific Ptd Ltd and Kuga Reflorestamento LTDA of the POH.”

As with the complaint filed by Mitsuji, no other details are given. However, none of the three J Trust officials are in Cambodia and it doesn’t appear likely that they will be. Thep reportedly has left the country with his family.

Group Lease was a Thai investor favorite until February 2017 when the hire purchase firm’s auditors alleged massive amounts of audit fraud, which was subsequently withdrawn. 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, Konoshita hurriedly left the country, leaving his brother Tatsuya and CFO, Alain Dufes, in charge.

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 both the British Virgin Islands, Japan and Cyprus.

Thus it appears that J Trust’s 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.

Major J Trust 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 seven-year low of ¥376.

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.