BELLAGRAPH Nova Group (BN Group) co-founder Terence Loh has resigned from the newly formed company, which was recently thrust into the spotlight for doctored photos of Barack Obama in its marketing materials.

He and his cousin Nelson Loh have also agreed to legally separate all their business interests.

Mr Terence Loh's resignation comes as Novena Global Healthcare Group (NGHG) - founded by the scandal-hit Singaporean duo - is under police investigation over allegedly unauthorised signatures on some of its financial statements.

At close to 1am on Wednesday, BN Group issued a statement saying that Mr Terence Loh "is trying to solve the problems" arising from the probe into NGHG, and they thus "mutually agreed" that he should quit.

NGHG is not part of BN Group, the latter noted. The company added that it "has never consolidated or is by any chance linked to" NGHG and the alleged forgery in the financial statements.

Mr Nelson Loh is also a co-founder of BN Group, alongside Chinese business partner Evangeline Shen. The whereabouts of Mr Nelson Loh in recent weeks are not known, and he was not mentioned in BN Group's statement on Wednesday.

On Wednesday afternoon, the office of Mr Terence Loh announced that the cousins had inked a separation agreement on Tuesday.

Under the agreement, Mr Terence Loh will transfer all the shares he owns in Bellagraph Nova Pte Ltd (BNPL) to Mr Nelson Loh for $1. Thereafter, Mr Terence Loh will resign as director of this Singapore-registered company.

Mr Nelson Loh will also transfer all the shares he owns in three corporate entities to his cousin for $1, and then resign as a director of these entities.

The three are Singapore-registered Dorr Global Healthcare International Pte Ltd, Singapore-registered Rock Star Advisors Pte Ltd and Cayman Islands-registered NGHG and all subsidiaries of the latter.

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The duo agreed to complete the share transfers and directorship resignations by Nov 5, barring unforeseeable difficulties. Both parties will enter into a written agreement if an extension of time is required.

Ernst & Young (EY) last month lodged a police report claiming that its signatures were used on NGHG's financial statements even though the auditor did not sign off on them.

An EY spokesperson said it was "never the auditors" of the parent firm NGHG, which was incorporated in the Cayman Islands by the Lohs, although it worked for a Singapore-incorporated subsidiary Novena Global Healthcare Pte Ltd only in 2017.

On Wednesday, Mr Terence Loh "unequivocally" stated that he was not involved in the forgery, and that he has remained in Singapore and continues to be available to assist the Commercial Affairs Department in the probe. He declined to comment on the BN Group statement issued in the early morning about his resignation.

Under the cousins' separation agreement, should Mr Terence Loh discover after Oct 6 that he is a shareholder and/or director of any other company other than the four entities cited in his statement on Wednesday, both cousins "will do all that is necessary" to terminate such shareholding and/or directorship.

Mr Nelson Loh also "acknowledges and agrees that he remains liable on all guarantees that he executed despite the separation of interests".

Mr Terence Loh said that the document clearly separates the business interests that the duo had been involved in since 2008. "We have gone through many challenges together and the time has come now for each of us to chart our separate careers and pursuits," he added.

In late September, a group of chafed investors in NGHG moved to guard its interests, amid concerns about the company's accounts. Among these investors was Sinopharm Capital, the private equity arm of Chinese pharmaceutical giant Sinopharm.

NGHG's board has set up a special committee to investigate allegations that the audit signatures were forged and to "restructure and scrutinise" the company's affairs. The Lohs are not part of this committee.

The board also stated that NGHG is not wholly owned by the duo. "The majority of the beneficial interest in NGHG is ultimately held by individual, private and institutional investors," it noted, adding that the firm is "wholly unconnected and unrelated" to BN Group and Catalist-listed Axington.

The Business Times (BT) understands that the NGHG board consists of four directors - apart from the Lohs - and represent the interests of Singaporean as well as Chinese investors.

Mr Terence Loh and Mr Nelson Loh are also the controlling shareholders of Axington, which said last month that it was engaging with the duo to obtain clarity on "strategic changes" expected to be made in the firm's business direction.

Both men are looking to sell their super-majority stake in Axington and had approached several parties, BT reported two weeks ago.

Five of Axington's directors - including Ms Shen, who was the chairman - resigned in August.

Mr Terence Loh said on Wednesday that the separation agreement with his cousin provides clarity for him to resolve the legal and corporate issues of the businesses transferred to him.

The Loh cousins and Ms Shen formed BN Group in July after merging the Lohs' investment vehicle, Dorr Group, with her Bellagraph Group.

BN Group announced in August it was in advanced talks to buy high-profile football club Newcastle United.

Last week, it insisted it was still seeking to buy the club, despite the police probe, photoshopped photos showing the trio meeting Mr Obama and other suspect claims made in the company's marketing materials.

Mr Nelson Loh, in the separation agreement, acknowledged that Mr Terence Loh was not involved in any business decisions within BNPL. Even though he was a director of BNPL,

Mr Terence Loh's approval and views were not sought before Ms Shen told the press that BN Group was still pursuing the Newcastle United takeover bid, according to the separation agreement.

Meanwhile, Mr Terence Loh said in his statement: "The role that others have played in the current difficulties will become, in due course, clear."

This article was first published in The Business Times. Permission required for reproduction