Chong Ket Pen's Manuever
Nobody nor company wants to be in that position, I'm sure.
But, there is a man who is popular in internet nowadays. I read a lot of news about him. He's even in YouTube!
It's Chong Ket Pen.
Who Is Chong Ket Pen?Chong Ket Pen is the Group Managing Director of Protasco Berhad, a public listed company since 2003 on the Main Board of Bursa Malaysia. It operates six business segments which are road maintenance, construction, property development, engineering services, trading and manufacturing, and education.
Here Is The Manuever of Chong Ket PenGlobal Capital Limited, an Indonesian venture capital and asset management company - and also major shareholder of Protasco Berhad, filed a civil suit against the company’s Group Executive Vice-Chairman and Managing Director, Dato’ Sri Chong Ket Pen for alleged abuse of power.
The Oil and Gas industry of neighboring countries (Indonesia and Malaysia) is currently being a highlight.
The suit revolves around an Investment Guarantee Agreement initiated by Chong Ket Pen with Global Capital Limited on November 3rd, 2012.
Chong Ket Pen, under his personal capacity, approached Global Capital Ltd to assist in buying over major shares of Malaysia’s Protasco Berhad from its former beneficial owner. This is also known as business take-over.
|Chong Ket Pen|
In return, shall nominate Global Capital Ltd’s investors as Board member in Protasco Berhad, and all that he wanted is to maintain his position as the company’s Group Managing Director.
In the deal, Chong Ket Pen assured Global Capital Ltd that he will propose to the Board of Protasco Bhd to undertake a new oil and gas business subsidiary.
Following that, Global Capital Ltd acquired a 27.11% stake in Protasco – a deal concluded within one month of discussions and negotiations, for USD 24 million or a 33% premium over the market price.
The deal, viewed as a ‘premium’ was done on the assurance of Protasco Bhd’s planned venture into the oil and gas sector.
As stated in the suit: "The acquisition of the shares at a huge premium was a risk for the plaintiff, given the performance and financial situation of Protasco Bhd.
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."
Soon after, Protasco Bhd announced that it was set to buy 76% of equity interest of an Indonesian oil and gas company, PT Anglo Slavic Utama (PT ASU) with a value of USD 55 million (Rp 800 billion).
But, the deal did not materialize due to non-fulfillment of conditions.
What Happened Next Within This Story of Chong Ket Pen's Maneuver?The Indonesia-based company is claiming USD 88 million from Chong Ket Pen over his act of contract breach, including:
- loss of investment and future profits for the stake in Protasco Bhd;
- loss of margin to finance the acquisition of shares up to USD 18 million;
- liability of USD 55 million to PT ASU – as guarantor for Chong Ket Pen pursuant to the Investment Guarantee Agreement;
- and USD 15.5 million as payment for the profit guarantee under the Investment Guarantee Agreement.
Following this discovery, Chong Ket Pen maneuvered by putting the blame on Global Capital Ltd’s investors (Tey Por Yee and Ooi Kok Aun) putting them under the limelight in 2014 on allegations of criminal breach of trust due to the non-disclosure of interest in a transaction involving USD 20.3 million.
However, they were granted a discharge not amounting to an acquittal by the sessions court in September 2017, which also proved what was brought by Chong Ket Pen as sham documents.
Bursa Malaysia public information also revealed that Chong Ket Pen has been drawing unrealistic remunerations from Protasco Bhd at the peak of USD 576,000 in 2017 and USD 1 million in 2016 respectively, after he gained control over the company.
This suggested that Chong Ket Pen 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.
Global Capital Ltd came into the thought that Chong Ket Pen has failed to ensure that Protasco Bhd was profitable, with a profit before tax of USD 7.1 million and USD 8.3 million in the third and fourth year under the Investment Guarantee Agreement.
Aside from that, a total of USD 26.2 million profit was also guaranteed over the four years.
Furthermore, it was also reported that Protasco Bhd had recently lost a huge contract, as its subsidiary HCM Engineering Sdn Bhd received a letter of termination from Turnpike Synergy Sdn Bhd (TSSB) due to delays in the project, suggesting a USD 622,000 earnings impact.
Following this, CIMB IB Research has therefore maintained its “Reduce” rating on Protasco Bhd at MYR 20 cents with a lower target price of MYR17 cents (from MYR 30 cents). Weak job execution and poor contract visibility is likely to weigh on its shares price.
Well, life is full of lessons and surprises. It might come from any of us. Be prepared when entering business. Fraudelences is likely to happen. We should hope and pray that we have trusted partners.