Major shareholder Global Capital of Indonesia sues Protasco managing director, claims RM368m

PETALING JAYA: The feud at Protasco Bhd has taken a new twist as substantial shareholder Global Capital Ltd (GCL) has initiated a civil suit against the group's executive vice-chairman and managing director Datuk Seri Chong Ket Pen for alleged abuse of power.
The suit revolves round the entry of GCL into Protasco in 2012 after the company promised a planned oil and gas foray and a profit guarantee for the next four years. In 2012, Protasco announced that it was buying a 63% stake in PT Anglo Slavic Indonesia (PT ASI) for US$22 million (RM92 million). The deal, however, did not materialise due to non-fulfilment of conditions.
In a statement of claim filed at the High Court in Kuala Lumpur last Friday sighted by SunBiz, the Indonesia-based company is claiming RM368 million from Chong, including loss of investment and future profits for the stake in Protasco; loss of margin to finance the acquisition of shares up to RM75 million; liability of US$55 million (RM228.5 million) to PT Anglo Slavic Utama (PT ASU), as guarantor for Chong pursuant to the investment guarantee agreement; as well as RM65 million as payment for the profit guarantee under the investment guarantee agreement.
To recap, GCL acquired a 27.11% stake in Protasco in November 2012 through its representatives for RM96.52 million or a 33% premium over the market price. The "pricey" deal was done on the assurance of Protasco's planned venture into the oil and gas sector.
Tey Por Yee, who emerged as the largest shareholder of Protasco, was appointed to the board together with three other GCL representatives – Ooi Kok Aun, Tan Yee Boon, Mohamad Farid Mohd Yusof.
"The acquisition of the shares at a huge premium was a risk for the plaintiff, given the performance and financial situation of Protasco. Nevertheless that risk was undertaken, given that the plaintiff was under the impression that their investment was protected by the assurance given by the defendant, inter alia his guarantees and obligations under the investment guarantee agreement," the suit said.
GCL alleged that Chong failed to ensure that Protasco was profitable, with a profit before tax of RM30 million and RM35 million in the third and fourth year under the investment guarantee agreement. A total of RM110 million profit was guaranteed over the four years.
Protasco's earnings have been falling since 2015. For the six months to June 30, 2018, it swung into the red with a net loss of RM3.1 million against a net profit of RM11.2 million in the same period last year, dragged by lower contribution in the property development, education and construction segments.
Tey and Ooi first came under the limelight in 2014 on allegations of criminal breach of trust due to the non-disclosure of interest in a transaction involving RM85 million. However, they were granted a discharge not amounting to an acquittal by the sessions court in September 2017. They were in the news again when Protasco demanded the Attorney-General's Chambers reopen cases against the two.
Tey ceased to be a substantial shareholder of Protasco in March 2016.
In the suit, GCL alleged that Chong entered into business transactions and decisions on operation, remuneration, payments of dividends and salaries for his own benefit at the expense and the best interests of the company.
According to Protasco's latest annual report, Chong raked in RM2.41 million remuneration in 2017. He has been a Protasco director since May 2001 and was appointed as executive vice-chairman and managing director in February 2013. He has a 16.91% direct and a 10.31% indirect stake in the company.