Blood Lust (6 page)

Britain’s brief and notorious return to gold
from 1925 to 1931 was a return only to a modified standard known as the bullion
standard under which convertibility was limited to standard 400-ounce bars
(meaning that it was limited to the rich). This was accompanied by a first
experiment with the gold exchange standard under which national currencies were
no longer directly convertible to gold for international settlements, but only
through the medium of certain key currencies. After the war, this became the
basis of the Bretton Woods system under which foreign exchange holdings were
convertible into gold only through the dollar.

General de Gaulle referred to gold in 1965,
‘which’ he said, ‘does not change in nature, which has no nationality, which is
eternally and universally accepted as the unalterable fiduciary value par
excellence’. “History,” says Mendelsohn, “contradicts these sentiments in every
particular.” It is for a start by no means true that gold enjoyed unbroken historical
primacy. For over a thousand years, to the late 13th century, Europe relied
mainly on silver and for the next 500 years there was continuous rivalry
between silver and gold. At the end of that period Britain became the first to
start drifting into a gold standard largely because the Indian trade was
draining it of silver. The use of precious metals did not ensure the stability
of money. Kings commonly debased the currency by ‘crying up’ the face value of
coins and by other means, usually to finance state expenditures, but sometimes
to meet the demand for more liquidity to finance the growth of trade. Henry
VIII, for example, devalued the English currency by no less than 60 per cent in
seven years. Medieval and renaissance Europe was a crazy quilt of fluctuating
currencies; 15th century Germany had about 600, and every important Italian
city had its own. There was constant arbitrage between currencies and between
gold and silver, ineffectually countered by controls on trade and bullion
shipments. Contracts came to be expressed in European units of account, like
today’s SDRs and privileged landlords like Oxford colleges won the right to
insert commodity clauses into their leases. So much for gold’s eternal
verities!

The age of the full gold standard in Britain
was extremely brief and it was shorter still in the rest of the world. During
the 19th century, world output expanded as never before, mostly accompanied by
falling prices. Productivity increased rapidly in this early stage of
industrialization, government expenditures (and services) were minimal, the
resources of new continents lay open to Europe’s surplus population, labour was
docile and so were commodity producers. These circumstances were not the result
of the gold standard—they were the circumstances that allowed the gold standard
to work. When these circumstances ceased to exist the gold standard was
abandoned, never to be tried again.

Finally, a word by Mendelsohn about the
importance still attached to gold as a strategic reserve by defence ministries
more than by finance ministries. The evidence, he says, does not show that gold
has been particularly helpful in modern war. Britain financed only three per
cent of its net foreign purchases by the sale of gold during the Second World
War, fighting mainly on credit. Russia similarly fought mainly on credit and
aid, while Germany found the real resources of occupied countries more useful
than their bullion. The larger powers did not need gold and Czechoslovakia
provides the classic illustration of its futility for a small power. In 1938,
that country’s gold stock was transferred for safe-keeping to the Bank of
International Settlements, which lodged it in the Bank of England. The
following year, Hitler was recognised as the ‘Protector of Czechoslovakia’ and
the Czech gold was transferred to the Reichsbank. After the war, it was
‘returned’ to the Czech government which in 1975 was still trying to get the
money out of the vaults of the New York Federal Reserve Bank, where most of the
world’s gold is stored (not at Fort Knox).

In 1979, Singapore was the sixth largest
importer of gold in the world market. Of an estimated total supply of 1,835
tons, the Republic absorbed 65 tons, or nearly four per cent. Working on an
average price of about US$307 an ounce, the approximate value of 2.1 million
ounces comes to about US$650 million.

These figures were published in the review
of the bullion market by Samuel Montagu and Co. of London. The review said that
in the Far East in 1979 demand was 285 tons, about 75 tons higher than 1978.
The three most important markets were Japan, Hong Kong and Singapore. Hong Kong
merchants imported twice as much as they did in 1978 and most of it was thought
to have found its way to Taiwan, where there is a lot of hoarding. The report
also said that in Southeast Asia there were significant imports into Singapore
from Europe. Out of the 65 tons about 13 tons remained in Singapore. A
significant proportion of this gold moved to Indonesia, but during the second
half of the year considerable re-flows from Indonesia were noted.

Total production of gold in 1979 was
estimated at 961 tonnes. USSR sales were estimated at 240 tonnes.

Estimating world gold supply is very much a
guessing game.  Michael Brown, the chief economist at South Africa’s powerful
Chamber of Mines, expected global gold supply to the markets to fall to 1,650
tonnes in 1980 compared to his estimated 1979 total of 1,750 tonnes. This view
was based largely on a possible further cut in Soviet sales and cuts in
official sales by monetary authorities, such as the United States Treasury. The
South African mines were unlikely to produce much above 700 tonnes in 1980. All
bullion sales to world markets are handled by the South African central bank.
The companies can market Krugerrand gold coins up to a volume of one-third of
total gold output. A record 6,012,293 Krugerrands were sold in 1978 (192 tons
of gold). In 1979, the Russians were thought to have collected US$2,000 million
from gold sales.

World output of gold reached its peak in
1970 when a total of 1,639 tonnes were produced. South Africa remains by far
the leader of the gold producers, although its pre-eminent position is being
eroded by Russia which has expanded its output dramatically with the help of a
huge seam at Muruntau in Western Uzbekistan. In 1970, South Africa’s gold
production reached 1,000 tonnes, accounting for 60 per cent of total world
output of 1,639 tonnes.

For 35 years from 1934, the price of gold
had been fixed at US$35 per ounce. During the next decade, the price of gold
increased nearly ten-fold. In August 1971, dollar interchange-ability halted.

Since 1666, the world’s most important gold
market has been London. Most of the world’s gold is handled by the London and
Zurich gold markets. Canadian and American gold is absorbed within the
Americas, and Australia’s output is either used at home or sold to Hong Kong or
Singapore.

In January 1980, the price of gold crashed
through the US$600 per ounce barrier. The Soviet Union was reckoned to have
become about US$18,000 million richer as a consequence. One report said that
although the scale of Soviet gold production and the size of Soviet gold stocks
are closely guarded secrets, the USSR was believed to have reserves of gold
amounting to 3,000 tonnes. The USA’s gold hoard was thought to be more than
8,000 tonnes; in January 1980 it was worth US$190 billion.

Ngo, the Singapore gold smuggler, was
murdered in 1971. Seven of the nine men responsible for his death, and the
death of his assistants, were hanged in February 1975. By an odd twist of fate,
they were to die more than two years after gold smuggling from Singapore had
ceased to be a lucrative if dangerous illegal occupation. On 14 August 1973,
while the condemned men were still in jail awaiting the verdict of the Court of
Appeal, the Singapore Government, for economic reasons, decreed that henceforth
anyone could freely move gold into and out of Singapore.

On 8 March 1974, the Singapore police
detained a young foreigner who arrived in a motor boat at Clifford Pier
carrying forty gold bars worth $560,000. He had ten bars stuffed in his shirt.
Another 30 were found in his suitcase. Three policemen stopped him as he
stepped out of the boat. They became suspicious when they saw him walking
awkwardly. They searched him and found the gold. He was led away to the nearest
police station where he was promptly released and the gold returned to him. It
is no longer an offence to bring gold into Singapore—even if it is gold
smuggled out from other countries. Each country must look after its own
smugglers!

In 1977, a Penang businessman, Pang Piow Kan
alias Boh Piow Kan, was fined $1 million (in default three years jail) for
trying to smuggle 40 one-kilogram bars of gold (valued at nearly $550,000) into
Malaysia. The gold was forfeited. He was caught in a customs ambush near the
Causeway. Somebody had tipped them off. The gold was found hidden under the
floorboards of his Volvo.

In nearby Indonesia, gold smuggling still
goes on. Customs officials at Jakarta airport in January 1980 seized about 54
kilograms of gold worth SGD$3 million packed in condoms to be smuggled out to
Singapore. Two smugglers were arrested.

IN SINGAPORE, AS IN OTHER COUNTRIES,
when murder is suspected, a judicial inquiry is held to determine whether the
accused has a case to answer. The inquiry into the death of Ngo Cheng Poh, and
his two employees, took nine days. It was held in the Fourth District Court
before the magistrate, Mr F.G. Remedios. The prosecutor was Mr S. Rajendran,
Senior State Counsel. He argued the police case presented by the Investigating
Officer, Superintendent Chia Quee Kee, assisted by Detective Inspector Oh Chye
Bee. The former Chief State Counsel, Mr Francis T. Seow, now in private
practice, appeared for the two brothers. Mr N.C. Goho represented Richard
James, Stephen Francis and Konesekaram Nagalingam. Mr G. Gopalan appeared for
Peter Lim Swee Guan, and Mr Leo Fernando defended Alex Yau Hean Thye. Mr John
Tan appeared for Stephen Lee Hock Khoon. Singapore’s leading criminal lawyer,
Mr David Marshall (who became Singapore’s Ambassador to France when he retired
from the Bar in 1978), held a watching brief for ‘certain prosecution
witnesses’. They were never named. Mr T.W. Ong held a watching brief for Air
Vietnam, and Mr S.K. Lee watched the interests of Mr Ngo’s family. Mr P.
Suppiah held a watching brief for Augustine Ang, the State’s chief prosecution
witness.

Mr Rajendran made his opening address on 4
May 1972. As the Solicitor-General, Mr A.W. Ghows, was to point out at the
trial more than a year later, the purpose of a preliminary inquiry is purely to
ensure that no one was made to stand trial unless a prima facie case is made
out against him. “All that the Court below has to do is to record enough evidence
to commit the nine accused to trial,” Mr Ghows had declared.

Mr Rajendran told how the Chou brothers,
Andrew, aged 31, and David, aged 34, out for revenge, plotted the killing of
two or three businessmen. The brothers had asked two friends to round up a few
boys to do the job for which they were prepared to pay $20,000. He said the job
had to be clean and quiet and ropes were to be used to strangle the men
quietly. They were to knock them off at the Chou brothers’ home and take them
elsewhere for burial. David Chou, a divorcee with two young daughters, was a
university graduate and sales manager at a commercial firm. Andrew was an air
traffic supervisor with Air Vietnam. Andrew was involved with three syndicates
in smuggling gold. “In October last year,” said the Senior State Counsel, “a
sum of US$235,000 which had arrived on an Air Vietnam flight as payment to the
three syndicates for gold, was missing. Andrew was pressured to find it. Andrew
suspected that it had been stolen by certain members of the airport staff.
After a few days of investigation, most of the money was recovered from Chua
Nguan Key, a traffic hand.”

As a result of this episode, relationships
between the syndicates and Andrew were strained. The three syndicates were: Ngo
Cheng Poh of Kee Guan Import-Export Co., in Pekin Street; Chee Pui Cheng,
proprietor of Eastern Watch Co., and Lee Bor, proprietor of Lee Tong Heng
Import-Export. Mr Rajendran said that Chee Pui Cheng did not trust Andrew
anymore. He ceased exporting gold through him. Lee Bor sent only one more
consignment through Andrew. This made Andrew angry. His income from gold
trafficking was considerably reduced. It was then that Andrew planned Ngo’s
murder and plotted to rob him of gold worth half a million dollars. Mr Rajendran
said that after about two months of planning and the recruiting of seven
people, the two brothers murdered Ngo (55 years old) and two of his employees,
Leong Chin Woo (51 years old) and Ang Boon Chai (57 years old). The murder took
place at Chou’s home at 19, Chepstow Close in Serangoon Garden Estate at
midnight, on 29 December 1971.

According to plan, the $500,000 worth of
gold bars which Ngo brought to Chou’s house that night for him to export out of
Singapore were delivered to Catherine Tay. She had arranged for Tan Kay Hwa to
buy the gold bars.

Also charged with murder were Peter Lim Swee
Guan (24 years old), a despatch clerk, Stephen Francis (20 years old), Alex Yau
Hean Thye (19 years old), Richard James (18 years old), Konesekaram Nagalingam
(18 years old) and two 16-year-olds—Ringo Lee Chiew Chwee and Stephen Lee Hock
Khoon. All nine were accused jointly of being members of an unlawful assembly,
one or more members of which murdered Ngo, Leong and Ang.