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shali
15-01-2006, 03:22 AM
Extract of judgement of the Court of Appeal handed down last week. Edited due to space contraint.

--shali--

DALAM MAHKAMAH RAYUAN MALAYSIA
(BIDANGKUASA RAYUAN)
RAYUAN SIVIL NO. W - 02 - 1009 -2003
ANTARA

FAWZIAH HOLDINGS SDN BHD ... PERAYU

DAN

METRAMAC CORPORATION SDN BHD
(dahulunya dikenali sebagai Syarikat Teratai K.G. Sdn Bhd) ... RESPONDEN

[Dalam Perkara Mengenai Guaman Kod: D5-22-110-1995 Dalam Mahkamah Tinggi Malaya Di Kuala Lumpur (Bahagian Dagang)

RAYUAN SIVIL NO. W - 02 - 1013 -2003

--------------------------------------------------

JUDGMENT OF GOPAL SRI RAM. JCA

Preliminary
There were, in broad terms, two issues before the learned judge. One in respect of liability; the other in respect of quantum. He resolved the first in the plaintiffs favour but refused to award the lump sum claimed by it. He also refused to make any award for future loss which the plaintiff claimed as being due to it as a matter of contract or alternatively under a trust. Having found liability in the plaintiffs favour, he dismissed the counterclaim. The plaintiffs appeal is directed upon the quantum issue whilst that of the defendant is against the issue of liability.

Facts and background

6. Dato' Fawziah is an enterprising businessperson. She formed two companies. They are the plaintiff and the defendant. But at that time the defendant was known as Syarikat Teratai K.G. Sdn Bhd, or STKG for short. That is the name you will find in the several documents in this case. Dato' Fawziah and her mother were the only two shareholders of these companies. In 1986, the City Hall of Kuala Lumpur or DBKL called for an open tender to design, construct, finance and operate the privatisation of certain roads in and around Kuala Lumpur. There were other bidders. But it was the defendant that succeeded in its bid. On 20 November 1987, the defendant entered into an agreement ("the first concession agreement") with DBKL. Then on 31 January 1989, the defendant entered into a licence agreement with DBKL.

7. A large sum of money was required to carry out the works. The defendant did not have it. Funds had therefore to be obtained from investors. A firm of professional financial consultants, called Schroder, was engaged to advise on the matter. They prepared an Information Memorandum meant for potential investors. That document contained, among other things, a proposal to restructure the defendant so as to divest it of all its non-concession businesses. This was important because no potential investor wants to buy into an ongoing business that may have problems. It makes better commercial sense to invest in an entirely new venture which is poised to start on a clean slate, as it were. The restructure was carried out by way of-a sale agreement dated 31 March 1988 (which I find convenient to refer to as the restructure sale agreement) entered into between the plaintiff and the defendant. Later, a supplemental sale agreement dated 12 September 1988 was also executed which provided for some further consideration for the restructure by way of sale. ...

8. In due course new shareholders subscribed for shares in the defendant. They were all reputable institutions of undoubted financial liquidity. They brought in the much needed capital; ...

9. The defendant successfully completed the projects undertaken by it. It spent monies on these which were partly from borrowings. In accordance with the first concession agreement it looked forward to recouping its capital expenditure through the collection of toll. Then something happened that was to have a far reaching and detrimental effect upon the plaintiff

10. In or about September 1990, there was a public demonstration at the toll booth established by the defendant along the Cheras highway protesting at the impo....There then took place a chain of events as evidenced by, contemporaneous documents and uncontroverted fonts that reveals a scandalous state of affairs.

11. It begins with the defendant's board asking Dato' Fawziah to discuss with DBKL and the Federal Government various options to have the matter resolved. One of these options was the payment of compensation to the defendant for termination of the first concession agreement and in accordance with its terms. The different solutions to the problem that had presented itself through no fault of the defendant were put to DBKL vide the defendant's letter dated 8 October 1990. DBKL in its letter of 20 October 1990 agreed in principle to take the option of terminating the first concession and paying compensation. But no figure was mentioned although the defendant had put forward an estimated sum of MS764.2 million as compensation. An appeal to the then Minister of Finance, Tun Daim Zainuddin, fell on deaf ears. He simply told the defendant's then existing shareholders that the Federal Government was not in a position to pay the defendant any compensation.

12. The next thing that happened was this. By letters dated 12 November, 1990 and 24 November 1990 a company called UEM Bhd, a public limited company made an offer to purchase all the shares in the defendant company for a sum ofM$97.5 million. Curiously enough, neither letter made any mention of the proposed termination of the concession agreement by DBKL. In reality the shares were to be purchased by a company nominated by UEM. That company was Metro Juara Sdn. Bhd. which had merely two shareholders who were also its sole directors. These gentlemen were one Anuar Othman and one Dato Halim Saad. The defendant's shareholders could not resist the sale. Their predicament is reflected in a document called the Directors Briefing Note dated 13 December 1990. And it is not difficult to appreciate their dilemma. The whole idea of obtaining the tender was Dato' Fawziah's brainchild. The other shareholders had invested large sums of money. The defendant had done all that was required of it under the first concession agreement. It had spent large sums of money to carry out its obligations. It now found itself with the ground cut from under its feet because of DBKL's termination of the first concession agreement. No compensation had been paid to the defendant as matters then stood although compensation was clearly payable. No one in his or her right mind will consider the choice of selling of their shares to Metro Juara at RM 97.5 million as a choice at all. All the independent evidence on record points to this being in reality a crude case of economic duress presenting itself in a more subtle form.

13. Now, the offer by UEM to buy out the defendantís shares for RM 97.5million simply does not make any commercial sense. Here you have a company that has just had its loan and shareholders capital wiped out in one stroke. It had no money in its coffers. It had huge debts. It had no prospects of receiving any compensation from DBKL. So why pay RM 97.5 million for the shares of such a company? The answer is simple enough. Anuar Othman and Dato Halim Saad had something which the plaintiff did not. And that was the patronage of the then Minister of Finance, Tun Daim Zainuddin. The events leading to the takeover of the defendant company and subsequent thereto clearly bear this out. For example, look at the confident way in which Metro Juara behaved. ....

15. Not long after the take over, a strange thing happened. Where doors were once closed to the defendant before its take over, as if by the utterance of a magic spell all bureaucratic doors were opened to the defendant after its take over by Metro Juara. And, as if by the rub of a magic lamp, the Federal Government and DBKL who hitherto claimed to be impoverished suddenly found themselves flush with funds. ....

... On that very day, that is to say, '13 February 1992, two other events occurred. First, DBKL entered into another concession agreement with the defendant. I will refer to this as the second concession agreement. Second, the Ministry for Public Works gave the defendant an undertaking to pay it RM 32.5 million as "payment for share premium" not "previously taken into account": So far as this case is concerned, the words within quotation marks are meaningless. Because they have no nexus whatsoever to any of the agreements entered into between the several parties. You may well ask how all this could have happened without the direct involvement of Tun Daim. It is also incomprehensible why the defendant as it was constituted immediately before the takeover by Metro Juara was not given this same financial support by the Federal Government. After all, at least two of the pre-takeover shareholders were either Government concerns or Government assisted concerns. And in the case of Tabung Haji, the ultimate beneficiaries would have been the poorer section of our society. I think that it is a fair question to ask why taxpayers' money was channeled into the hands of two private individuals - to profit them - instead of a wider section of the general public. It is not at all clear why the Minister for Finance used his power to favour Anuar Othman and Dato Halim Saad.

17. For the sake of completeness, it must be mentioned that the RM 32.5 million mentioned earlier was siphoned out of the defendant's account by Anuar Othman and Dato Halim Saad. I asked learned counsel for the defendant during argument how this ever could have happened. His reply was stupefying. He said that these two gentlemen had, as shareholders, paid this sum into the defendant's account and were now reimbursing themselves. This answer overlooks the most elementary principle of company law. It is this. The shareholders of a company-have no interest, legal or equitable, in the assets of their company. See, Law Kam Loy v Boltex Sdn Bhd (2005) 3 CLJ 355.

aurora97
15-01-2006, 03:40 AM
this is a very very sticky and controversial case indeed, alot of people involved, and like Lordship mentioned strange things do happen and occasionally too.

shali
15-01-2006, 11:39 AM
Malaysiakini reports:

Probe Metramac case, AG & ACA told

Jan 14, 06 6:46pm

The Attorney-General (AG) and the Anti-Corruption Agency (ACA) must investigate the findings of the Court of Appeal over the possible criminal improprieties and corrupt deal among a high ranking ministerial figure and prominent businesspersons in the Metramac case, said corruption watchdog Transparency International (TI) today (14-1-06)

aurora97
16-01-2006, 04:23 AM
Acting without fear or favour, the ACA nevertheless has to wait for a Green light from the Government to investigate. Unlike, ICAC in HK they are toally independent. Only this kind of institution spreads fear to people who practice corrupt intentions, furthermore they even turn real life investigation into Chinese serials.

Sadly again, Malaysiakini.com is no mouth piece of the government. They can print the world is actually squarish, but no one will actually go check whether the findings are true.

As soon as the case started, the end is already approaching. For now just watch and see, just think of it as a nightmare; by tommorrow you will never hear a single word about this case again.

Refer back to Lord Acton's quote as below.

Just hot from the Oven from NST, checkout:
http://www.nst.com.my/Current_News/nst/Sunday/Frontpage/20060115075517/Article/index_html
Now we've got witness to a CBT, committed by a Sr Home Affairs minister's son. This should be interesting, his not as high lvl as the people mentioned in your post but this should be the yardstick on cracking down corruption at high places.

Rocky19
16-01-2006, 03:57 PM
This is are very big fish, bigger than the KFC fish bigger. wonder if the govt which has a big mouth will take a bite at this?I hope they do as taxpayers money has been used to compensatethem and make a mockery of the whole system.

Can you figure this, you build something and invest RM65million and get a compensation of RM794million if things don't work. which donkey agreed to this kind of contract? Now they got the compensation but continue collection toll.Not sure when they resume collection but I vaguely remember it was 1 or 2 years later.

So lets see there is Halim Saad and dont forget Tajudin Ramli and the master himslef, Daim. Sounds like a Star wars bad guy camp. ;)

joker2107
17-01-2006, 01:07 AM
Malaysiakini reports:

Probe Metramac case, AG & ACA told

Jan 14, 06 6:46pm

The Attorney-General (AG) and the Anti-Corruption Agency (ACA) must investigate the findings of the Court of Appeal over the possible criminal improprieties and corrupt deal among a high ranking ministerial figure and prominent businesspersons in the Metramac case, said corruption watchdog Transparency International (TI) today (14-1-06)

somebody's gonna say theres a federal court appeal n action by ag or aca is gonna b construed s subjudicial.

aurora97
19-01-2006, 10:28 AM
After reading Halim Saad's responce, i'm kinda lost about whose actually wrong. His learned judge or is it just a confusing ploy?

shali
19-01-2006, 03:08 PM
After reading Halim Saad's responce, i'm kinda lost about whose actually wrong. His learned judge or is it just a confusing ploy?


All parties there have valid views supported by law and practice. We'll see.

aurora97
21-01-2006, 10:34 PM
Yes, a probe is on regarding the "Metramac Gate." Rm 10 bucks say that 1 person will become scape goat and the rest will walk free or no one will get reprimanded for this inccident.

Rocky19
26-01-2006, 09:40 AM
Interesting letter (http://www.sun2surf.com/article.cfm?id=12780) . The show goes on. When will we get the truth? daim should be resposnding soon as well.

we should all support The Sun, the first to carry this letter in their paper yesterday. and it is free. ;)