The former general manager of Genneva, a gold investment company which owed its customers gold bars worth almost $45 million in total, was sentenced to 56 months' jail yesterday.

Kwok Fong Loong, 65, a Malaysian, had pleaded guilty to one count of fraudulent trading earlier the same day.

According to court documents, Genneva was in the business of trading gold bars.

Among other things, it offered a buy-back scheme under a contract which promised customers monthly returns of between 2 per cent and 3.1 per cent of the price of the gold they bought from the firm.

Genneva, which was already experiencing financial difficulties by 2012, started to delay payment of the amounts it owed to its clients, including the monthly returns, in July that year.

It subsequently implemented a "Gold Inspection" scheme under the direction of its Malaysian directors.

The new scheme required clients who had previously purchased gold bars from Genneva to deposit them with the firm for inspection.

The customers were then told that Genneva would return to them an equivalent quantity and purity of gold after a period of time. Different clients were informed of different periods, which ranged from three days to a week.

Instead, the company disposed of the gold bars it had collected, including selling the bars to new clients or pawning them for cash.

"Essentially, by obtaining gold on credit from existing clients, Genneva used the gold to relieve its cash-flow problems by generating more cash for the company," said Deputy Public Prosecutor Hon Yi .

Between August and September 2012, the company collected some 3,578.9kg of gold from its clients under the scheme. It eventually started to default on returning gold to its customers, but continued to operate the scheme and collect gold from its clients.

Court documents state that as of Sept 30, 2012, Genneva still owed its clients gold worth almost $45 million in total. Past reports had estimated the company to have more than 10,000 customers.

In mitigation, Kwok's lawyer James Ow Yong said that his client had not benefited from the scheme.

However, District Judge Ronald Gwee said Kwok could have acted as a whistle-blower and reduced the losses suffered by the company's clients.

The judge backdated Kwok's jail term to Feb 22 last year, when he was remanded.

For his offence, Kwok could have been jailed for up to seven years and fined up to $15,000.

A case against Genneva's former head of transactions Lim Hong Boon, who is also charged with fraudulent trading, is pending.