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Mudajaya in tough battle for justice

KUALA LUMPUR: Mudajaya Group Bhd finds that it is fighting a tough battle in its pursuit of justice.

The group’s independent non-executive chairman Datuk Yusli Mohamed Yusoff — formerly Bursa Malaysia Bhd chief executive officer (CEO) — said the group is aggrieved at the outcome of the case of a former employee Michael Chua Khain Keng, who was caught stealing RM72 million from Mudajaya.

Chua was arrested and charged under Section 403 of the Penal Code for Dishonest Misappropriation of Property amounting to RM800,000 last week. He has since been released on bail and the court hearing is set for April 5.

Mudajaya’s top management and the board of directors are puzzled that Chua has been charged with misappropriating only RM800,000 — which is slightly more than 1% of the stolen sum.

The light charge seems to be encouraging, instead of penalising, white-collar crimes in Malaysia, said Yusli, who is also the president of Malaysia Institute of Corporate Governance.

“We are pleased that the person was apprehended and brought back to Malaysia to face charges. But we were extremely surprised at the charge made by authorities against him, when we compared it to the amount of money that we know has been taken from the company, which he himself has admitted.

“It just does not seem to make sense. We are now trying to seek clarification from [the] authorities, and are awaiting their response,” he told The Edge Financial Daily last Friday.

“If you are talking about a system that wants to penalise and deter criminals, I think we are doing the opposite,” said Yusli, “A major crime shouldn’t be treated as a petty crime, and at the moment it appears to be something like that.”

Mudajaya has written to several authorities, including the Attorney-General’s Chambers and the Malaysian Anti-Corruption Commission (MACC) on the matter.

Group managing director and CEO James Wong Tet Foh, who was also present at the interview, commented that last week’s charge sheet had deviated from the first police investigation paper.

Wong was told by the police that it was an “open-and-shut case”, and so the initial paper was working towards a much serious charge that could lead to a 20-year jail term under Section 408 of the Penal Code.

Chua has been charged with misappropriation of funds from a power plant project, in which Mudajaya was the subcontractor for the civil and structural works, last week. The RM720 million contract was awarded in June 2011.

Mudajaya’s board smelled the rat when the project started showing an alarming profit deterioration. An internal investigation was launched and irregularities in payments and contract documents revealed were traced back to Chua.

A follow-through forensic audit led by KPMG initiated confirmed in June 2015 the breach of duties and obligations and inappropriate conduct, and reports were lodged.

Chua, who had then resigned after spending nine years with the company, admitted to his acts when confronted and agreed to return all monies taken out of the company, said Wong.

The misappropriation of funds was conducted through “multi-layered transactions” over a period of time. According to Wong, monies were deposited into a bank account jointly owned by Chua and his spouse, as well as an individual bank account belonging to his biological brother.

However, Mudajaya said it has only been able to recover some RM16 million of the total sum, including cash of RM1 million and the transferred titles of Chua’s 21 properties in Kota Damansara. The project suffered losses amounting to RM99 million, and has taken a toll on the group’s financials.

According to Wong, the 44-year-old Chua has started a new life as a motorsports engineer in New Zealand after he was caught for the wrongdoings, where he owns over 20 luxury cars and a bungalow there valued at some NZ$5 million (RM13.89 million) in total.

Frustrated Yusli said Mudajaya hopes that rightful measures can be taken when matters are brought to the light of enforcement institutions, especially after the government transition.

He stressed the need for an improved public governance system in Malaysia, for corporate governance to be effectively and properly practised at high standards.

Both the public and corporate [sector] will need to work hand in hand to fight against a “corrupted system” which is still alive and well, said Yusli.

“There is no point in pretending that the system works, even in all the huge publicity about 1MDB (1Malaysia Development Bhd) and all other cases. If this is an example of how our public governance system works, I’m not surprised — and no one should be — at how slow these cases are moving.

“It appears that past practices are still continuing. You want to do the right thing, but the system seems to be working against you,” he added.

Wong concurs that public governance is essential, pointing that foreign investors are watching closely at cases, like Mudajaya, as a yardstick to access the country’s legal system and protection of business interests.

Wong observed many multinational corporations and companies in the past suffered similar setbacks as Mudajaya.

He said the frustration of these companies stem from the extensive amount of time police investigations needed — at an average timeframe of four to five years — and the bureaucracy of the judiciary if the matter is taken to court.

Having been through the gruelling process, Yusli said it bluntly that it raises concerns that the current system is “rotten”.

“If the new government is serious about implementing the rule of law, it seems that there is a lot of work that needs to be done. We will do our part as a corporate citizen, but on our own we can’t implement justice. We need the public governance system to work,” Yusli said.

Source : TheEdgeMarkets