Ex-CEO of Singapore-Listed & Suspended Eagle Hospitality Trust Salvatore Gregory Takoushian Charged for Agreeing to Non-Disclosure of Information, Security Deposits Shortfall by Master Tenants for $14.8 Million Standby Letter of Credit Leading to Default under Master Lease Agreements and Subsequently a $253 Million Loan Default
21st May 2024 | Hong Kong
The ex-CEO of Singapore-listed & suspended Eagle Hospitality Trust Salvatore Gregory Takoushian has been charged for agreeing to non-disclosure of information for security deposits shortfall by master tenants for $14.8 million (S$20 million) standby letter of credit, leading to a default under master lease agreements and subsequently a $253 million (S$341 million) loan default. Monetary Authority of Singapore (17/5/24): “Mr Salvatore Gregory Takoushian (Mr Takoushian) was charged today for disclosure-related offences under the Securities and Futures Act (SFA). Mr Takoushian was the former Chief Executive Officer of Eagle Hospitality Trust REIT Management Pte. Ltd. and Eagle Hospitality Business Trust Management Pte. Ltd., the managers responsible for managing Eagle Hospitality Trust (EHT), a stapled trust comprising Eagle Hospitality REIT (EH-REIT) and Eagle Hospitality Business Trust. Mr Takoushian currently faces 4 charges under section 203(1) read with section 331(1) of the SFA for consenting to EHT’s reckless non-disclosure of information that was necessary to avoid the establishment of a false market. Under master lease agreements governing the properties in EHT’s portfolio, the master lessees were required to provide, by 7 June 2019, standby letters of credit amounting to US$20 million, being the balance of security deposits owed to EH-REIT. The charges against Mr Takoushian concerned EHT’s alleged reckless failure to disclose to the Singapore Exchange Limited (SGX) information pertaining to the failure by the master lessees to fund the shortfall in security deposits at various points in time between 7 June 2019 and 14 February 2020. The failure to provide the balance of security deposits led to a default under the master lease agreements and in turn, a default on a US$ 341 million loan made to EH-REIT, among other borrowers.” The investigation was jointly conducted by the Monetary Authority of Singapore and the Commercial Affairs Department of the Singapore Police Force. If convicted, for each charge, Mr Takoushian faces a fine of up to $250,000 or imprisonment for a term of up to 7 years, or both. The investigations against the other former directors of EHT’s managers are ongoing.
“ Ex-CEO of Singapore-Listed & Suspended Eagle Hospitality Trust Salvatore Gregory Takoushian Charged for Agreeing to Non-Disclosure of Information, Security Deposits Shortfall by Master Tenants for $14.8 Million Standby Letter of Credit Leading to Default under Master Lease Agreements and Subsequently a $253 Million Loan Default “
Singapore MAS (2020 June) – The Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD) of the Singapore Police Force have launched a joint investigation into current and former directors, and officers responsible for managing Eagle Hospitality Trust (EHT), in connection with suspected breaches of disclosure requirements under section 203 of the Securities and Futures Act (Cap. 289). The investigation stems from a referral by the Singapore Exchange Regulation (SGX RegCo). This follows a review that was announced by MAS and SGX RegCo on 20 April 2020 into possible breaches of relevant laws and regulations as well as listing rules in relation to the issues surrounding EHT. The scope of the investigation will be widened if the evidence obtained reveal that other offences may have been committed. EHT is a stapled trust comprising Eagle Hospitality REIT (EH-REIT) and Eagle Hospitality Business Trust. Trading of EHT units was voluntarily suspended on 24 March 2020, after EH-REIT defaulted on a loan of $341 million. The loan default followed the failure of Urban Commons LLC, the master lessee of EHT’s properties, to (i) place with EHT the full sum of security deposits due under the master lease agreements, and (ii) make timely rental payments since December 2019.
Securities and Futures Act (Chapter 289) (SFA) – Section 203(1) SFA states: “A person to whom this subsection applies must not intentionally, recklessly or negligently fail to notify the approved exchange of such information as is required to be disclosed by the approved exchange under the listing rules or any other requirement of the approved exchange, if the person is required by the approved exchange under the listing rules or any other requirement of the approved exchange to notify the approved exchange of information on specified events or matters as they occur or arise for the purpose of the approved exchange making that information available to an organised market operated by the approved exchange.
- (2) Subsection (1) applies to the following:
- (a) an entity, the securities or securities-based derivatives contracts of which are listed for quotation on an approved exchange;
(b) a trustee-manager of a business trust, where the securities or securities-based derivatives contracts of the business trust are listed for quotation on an approved exchange;
(c) a responsible person of a collective investment scheme, where the units in the collective investment scheme are listed for quotation on an approved exchange. - (3) Despite section 204 or 335, a contravention of subsection (1) is not an offence unless the failure to notify is intentional or reckless.”
Section 204(1) of the SFA states: “Any person who contravenes any of the provisions of this Division shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 or to imprisonment for a term not exceeding 7 years or to both.”
Section 331(1) of the SFA states: “Where an offence under this Act committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of an officer of the body corporate, the officer as well as the body corporate shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly.”
Singapore MAS Major Ongoing Case 1 – Eagle Hospitality Trust for possible breaches of relevant laws and regulations, and exchange listing rules
- Possible breaches of relevant laws and regulations, and exchange listing rules
- 5th June 2020 – MAS and CAD launched joint investigation into Eagle Hospitality Trust (EHT) for possible offences under the SFA.
- Referred by Singapore Exchange Regulation (SGX RegCo)
- MAS is in the process of reviewing the large amount of documents seized and information obtained in the course of investigation.
- MAS has also sought advice from industry experts on the case.
Ex-CEO of Singapore-Listed & Suspended Eagle Hospitality Trust Salvatore Gregory Takoushian Charged for Agreeing to Non-Disclosure of Information, Security Deposits Shortfall by Master Tenants for $14.8 Million Standby Letter of Credit Leading to Default under Master Lease Agreements and Subsequently a $253 Million Loan Default
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