Introduction

In the recent case of Petrotech Marine Services Sdn Bhd v Defendants (D1, D2 and D3 & Zhu Pang) [2025] SGHC 105, the Singapore High Court found that the Defendants, including Petrotech’s former director, had conspired to defraud the company through fabricated invoices and agreements with sham service providers.  

The claimant, Petrotech Marine Services Sdn Bhd (“Petrotech”), brought proceedings against D1, a former director of Petrotech, as well as D2 and D3, who operated the entities that received the fraudulent payments. The Court held D1 liable for breach of fiduciary duties and conspiracy, describing him as the mastermind of the scheme. 

BR Law Corporation represented the successful claimant, Petrotech Marine Services Sdn Bhd. 

Brief Facts 

Petrotech, a Malaysian company, provided ship-to-ship (STS) transfer services, primarily for its main client Kunlun Trading Co. Limited (“Kunlun“). Its business model involved either directly charging Kunlun for services or engaging third parties, paying them, and then “on-charging” Kunlun with a mark-up. 

In 2017, D1, who was then a director of Petrotech, caused the company to enter into two agreements: 

• An “Exclusive Agency Agreement” with D2, a sole proprietorship operated by D2; and 

• An “Exclusive Agency Agreement” with D3, a sole proprietorship operated by D3. 

Between 2017 and 2019, Petrotech made payments totalling approximately US$2.85 million to D2 and S$4.7 million to D3. These agreements purportedly related to marine services, oil surveying, and maintenance work. 

In 2022, an internal investigation launched by Petrotech’s Directors uncovered irregularities. The company’s finance staff revealed that invoices from D2 and D3 had not been included in billing to Kunlun, and had been excluded under D1’s instructions. D1 remained a director of Petrotech until his removal in August 2023. 

Holding of the Court 

The High Court found that: 

• The agreements with D2 and D3 were shams. Neither entity had the expertise or business operations to render the services described in the agreements. The agreements contained false information and were executed for the purpose of channelling company funds out of Petrotech. 
  

• “Zhu Pang” was a fictitious individual. The Court held that there was no credible evidence of this individual’s existence. The Defendants were unable to provide contact details, messages, or photos. Their testimonies on how they communicated with Zhu Pang were found to be contradictory and evasive. 
  

• The Defendants’ claim that the payments were “on-charged” to Kunlun was false. Petrotech’s internal finance staff testified that D1 had instructed them not to include D2 and D3’s invoices in any billing to Kunlun. As a result, Petrotech absorbed the costs for services it never received, resulting in significant financial loss. 
  

• D1 breached his fiduciary duties. As a director, he owed duties of loyalty and care to Petrotech. The Court found that he orchestrated the fraudulent scheme, prepared sham agreements, and caused Petrotech to make payments he knew would not be reimbursed by Kunlun. 
  

• The Defendants conspired to defraud Petrotech. D1, D2 and D3 were found to have acted in concert to deceive Petrotech through false documentation and misleading justifications. The Court described D1 as the “mastermind” of the scheme. 
  

Petrotech was awarded judgment against the Defendants for the amounts unlawfully paid out under the sham agreements. 

Concluding Thoughts 

This decision underscores the high standards expected of directors in managing corporate funds and upholding fiduciary duties. Directors who knowingly enter into sham agreements and authorise unjustified payments may be held personally liable for losses incurred by the company. 

It also highlights the importance of robust corporate governance and due diligence, including proper internal controls and oversight of vendor relationships. The Court’s willingness to pierce through fabricated narratives reflects its firm stance on accountability and fraud. 

Notably, this case forms part of a growing trend in corporate fraud litigation in Singapore, reflecting the judiciary’s zero tolerance for dishonest conduct by company fiduciaries. 

For any related enquiries, please feel free to contact us. 

This article is produced by BR Law Corporation. It does not constitute legal advice and is intended to provide general information only. 

Reference Materials: 
The judgement is available on the Singapore Courts website.