Collaborated to defraud?

Metramac to pay RM65m


Two of the biggest names in corporate Malaysia received mention in the Court of Appeal today — Tan Sri Halim Saad and Tun Daim Zainuddin.

The story begins...


Once upon a time in 1986, Syarikat Teratai K.G. (STKG) now called Metramac was the owner and operator of the East-West Link Expressway (Karak-Kuantan) and Sungei Besi Expressway. Datuk Fawziah Abdul Karim and her mother Maimon Bee were directors and shareholders of Fawziah Holdings and they are also directors and shareholders of STKG.

In July 1986, Fawziah Holdings, through STKG succeeded in obtaining a tender from the Kuala Lumpur City Hall (DBKL) to design, construct, finance and operate the privatisation of a number of roads in and around the city, which included one in Jalan Cheras. In December 1988, four institutions invested in STKG, bringing in RM65 million worth of capital.

However, DBKL, the concessionaire, however, suspended toll collection sometime in September 1990 due to a demonstration at the Cheras toll plaza. As a result, compensation of RM764 million was payable by DBKL to STKG.

Halim and Anuar Othman then told Fawziah that the finance minister, Daim had told them that the Government had no money to pay compensation. It was at this juncture that Metro Juara came into the picture and bought STKG for RM97.5 million.

STKG was then sold by Metro Juara Sdn Bhd for RM97.5 million. (who owns Metro Juara? Your guess will be right).

On March 7, 1995, Fawziah Holdings filed an action for breach of contract against Metramac seeking RM65 million as compensation for loss of advertising rights and profits under future contract. Metramac counter-claimed for a number of declarations, including that certain clauses in the agreements were null and void. It also asked for an account of all revenues received by Fauziah Holdings under those agreements.

High Court judge Datuk Kang Hwee Gee had on Oct 2, 2003, ruled that Metramac was in breach of the agreements. However, Kang ordered loss of advertising rights to be assessed. He dismissed the claim for future contract.

Metramac appealed. Judges Datuk Hashim Mohd Yusoff and Datuk Zulkefli Ahmad Makinuddin heard the appeal with Gopal Sri Ram. Their decision was unanimous.

Gopal Sri Ram, the Appeal Court Judge delivering judgment said Metro Juara Sdn Bhd shareholders, Halim and Anuar Othman, had something which Fawziah did not: patronage of then Finance Minister Daim. The judge said DBKL was supposed to pay STKG RM764 million as compensation after suspending the company from collecting toll. "This is a crude form of economic duress presented in a subtle form," Sri Ram said. The judge said no right-thinking person would sell STKG for RM97.5 million when the compensation was RM764 million.

In a unanimous decision, the Court of Appeal ordered Metramac Corporation Sdn Bhd, a toll operator, to pay about RM65 million in compensation to a construction company for loss of advertising rights. Judge Datuk Gopal Sri Ram also ordered Metramac to pay Fawziah Holdings Sdn Bhd all proceeds to be received under future contract. Sri Ram also dismissed a cross-appeal by Metramac for a declaration that several agreements between them were null and void.

This probably is the first exposure of the corporate collaboration to defraud. It is not the first per se ... but it parade the conspiracy theory within the regime.