Bank Pembangunan sues former chief executive and 26 others for alleged fraud and bribery

KUALA LUMPUR (June 29): Bank Pembangunan Malaysia Bhd (BPMB) has filed a lawsuit against 27 defendants, including its former chairman and group chief executive (MD) Datuk Mohd Zafer Hashim, over a RM400 million loan granted at Aries Telecoms (M) Bhd.

The RM400 million loan, which was approved in May 2012, was to part-finance a RM1.3 billion project undertaken by Aries to install a fiber optic network around Peninsular Malaysia.

The Development Finance Institution (DFI) seeks a total of RM564.99 million in losses and damages as a result of the defendants’ actions, and makes another claim for exemplary damages against the defendants, as BPMB claimed be calculated acts. on the part of the defendants to make a profit for themselves, which, according to BPMB, “may well exceed any compensation payable”.

He also filed an ex-parte Mareva injunction – an asset freezing order – against all but a few of the defendants. Foreign companies were excluded, including a few incorporated in the British Virgin Islands.

The injunction application will be heard on July 1 before High Court Judge Ong Chee Kwan.

In the court filing seen by The Edge, BPMB accused the defendants of conspiring and using unlawful means to defraud the DFI, and concealing that fraud and its earnings from BPMB.

According to the IFD, the loan was disbursed to Aries without fulfilling the necessary conditions.

BPMB also alleged that the money, which was to be used for the fiber optic project, was misused. The huge sum was “siphoned off and/or wrongfully transferred” to other entities, he claimed, including Paneagle Holdings Bhd, BVS Trinity Sdn Bhd, VCB Malaysia Bhd, Orient Telecoms Sdn Bhd and/or Primawin Ltd – all of whom have been named as defendants in the lawsuit.

Bribes of RM8,000,000 for loan disbursement

The loan approval was granted based on, among other things, the appointment of Huawei Technologies Co Ltd, China (Huawei China) as the turnkey contractor to build, operate and maintain the project network. However, Huawei China was later replaced by Paneagle Holdings without the full knowledge, consent and/or approval of BPMB.

Although Huawei was dropped from the project, the RM400 million loan was still disbursed via two tranches of RM200 million each to Aries (then known as V Telecoms Bhd), according to the court filing, as Zafer reportedly approved two separate waivers of certain conditions for the loan. The waivers were made days before the first and second disbursements in July 2012 and November 2013, respectively.

BPMB said it discovered that former Managing Director and Director of Aries Group, Datuk Wira Ranjeet Singh Sidhu (13th Respondent) had, on behalf of Aries, made a payment of RM8 million to Zafer through Datuk Noorusa’adah Othman (Adah) (14th defendant) on July 4, 2012 for the successful disbursement of the RM400 million loan to the company.

Adah was the former senior corporate finance official of Tan Sri Syed Yusof Syed Nasir, who previously served as chairman and director of Aries, according to the court filing.

About two years later, in July 2014, Aries asked for more time to repay the loan to allow the company to be listed on the London Stock Exchange’s alternative investment market.

BPMB accepted the request in exchange for a full refund if the listing was successful. Aries, however, failed in his sign-up offer.

Going deeper into Aries and its associates

In July 2018, the DFI issued a notice of default on the loan to Aries, demanding full repayment of RM451.27 million.

A year later, in May 2019, a summary judgment was entered against Aries for the sum claimed, although the company appealed and obtained a stay of execution from the Court of Appeal, subject to the right of BPMB to appoint a receiver and manager (R&M) under the corresponding debenture.

The DFI then appointed Lim Keng Peo of Deloitte Corporate Solutions Sdn Bhd as R&M on Aries assets and businesses.

Lim’s investigations into Aries revealed that the defendants, in various capacities, were allegedly involved in:
• misrepresentation in the financial statements of Aries,
• the lifting of the conditions precedent to loan disbursement,
• manipulation of the nomination process and appointment of Silver Ridge Sdn Bhd (a wholly owned unit of publicly traded Silver Ridge Holdings Bhd) as the project’s Independent Verification Engineer (ICE),
• questionable verification process by Silver Ridge Sdn Bhd as ICE of the project,
• diversion of funds from Aries to other parties,
• the novation and transfer of assets from Aries to Orient Telecoms, and
• Unjustified payments by Aries to other parties.

While Silver Ridge Sdn Bhd and/or Silver Ridge Holdings had certified the completion of all 39 fiber optic links under the project, BPMB however said R&M could not find documentary evidence to show that the 1 562 km of fiber optic links had been built. .

The DFI also claimed that a Shailen Popatlal (second defendant) was implicated in the alleged misconduct and wrongdoing in relation to the loan granted, among others. BPMB claimed that Shailen was the fictitious director of Aries and that he controlled and/or owned and/or substantially owned Primawin Ltd (19th defendant), China Finance Ltd (20th defendant) and Arab Emirates Capital Ltd (now known as Hadron Equities Ltd, the 21st defendant), all of which were incorporated into the BVI.

Besides those named above, other defendants in the lawsuit include Aries director Wan Alias ​​Wan Ngah and former director Roslina Ibrahim; Paneagle Sdn Bhd and its director Abdul Wahid Abdul Ghani; Open Fiber Sdn Bhd and its director Mohd Radzi Mohamed; and Orient Telecoms Sdn Bhd and its directors Mustafa Ali Zaminali Sayed, Muhammad Shazhakim Shazarul Hisham and Shaza Arina Shazarul Hisham – the latter two being Roslina’s son and daughter respectively.

Silver Ridge Sdn Bhd and its director Wong Chee Keong were also named as defendants; BVS Trinity and its director Abd Hadi Abd Majid; and Zavarco Plc and its director Tunku Mazlina Tunku Abd Aziz.

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