Danaharta's deal with Tajudin over RM589mil is unsettling given that it had a judgement in hand for the amount
AN out-of- court settlement when you already have a favourable judgment is allowing the bird already in hand to forever fly away. When those whom you ultimately represent have no idea why you gave that bird up in the first place it makes it doubly worse.
Such is the case in the perplexing settlement between prominent Malaysian businessman Tan Sri Tajudin Ramli and Pengurusan Danaharta Nasional Bhd. Danaharta had already obtained judgement from the High Court against Tajudin in 2009 for a huge RM589mil, probably the largest sum awarded in Malaysian legal industry.
The judgement gives interest rate on the RM589 million at 2% over Malayan Banking's base lending rate from Jan 1 2006. Assuming a simple interest rate of 8%, that amount would have now swelled to about RM840mil if the judgment were effected today. What could have made Danaharta lose that kind of money? And did it get anything in return?
Danaharta is the national debt management agency set up in the wake of the 1998 Asian financial crisis to sort out debt problems in the banking system and recover as much money as possible from borrowers.
It had filed a suit against Tajudin, a high-flying and favoured businessman, part of a group close to former Finance Minister Tun Daim Zainuddin, who at one time controlled Malaysia Airlines (MAS) and before that mobile telephone operator Celcom through his vehicle Technology Resources Industries Bhd (TRI).
Tajudin got into serious debt and lost control of TRI and eventually sold his 32% stake in MAS back to the Government in 2001 at the same price he bought it several years back and much higher than the then market price, drawing heavy criticism. He had taken a loan of RM1.79bil to buy the stake in 1994.
Earlier this week, when the case came up for hearing before the Court of Appeal, it was disclosed that an out-of-court settlement was reached and basically that was that. The terms of the settlement were not made public, despite the case being of great public interest and the fact that Danaharta is publicly funded and has at least a moral duty to explain why it went for a settlement.
Predictably, the way this case has been disposed off has started tongues wagging and the rumour mill churning with much velocity. With important questions unanswered, serious questions over governance and accountability have risen to the fore and can only be detrimental for the country and its financial and capital markets.
As one lawyer pointed out, with the High Court judgement, Danaharta was no longer a plaintiff but a judgement debtor while Tajudin was a judgement creditor. At least it would have been prudent on Danaharta's part to wait until the Court of Appeal had decided on Tajudin's appeal.
In 2009, the Kuala Lumpur High Court ordered Tajudin to pay RM589mil to Danaharta following debts incurred when purchasing MAS shares. The amount was the balance from the RM1.79bil loan taken to purchase MAS.
The High Court ordered him to pay Danaharta at Dec 31 2005 the principal sum of RM589mil owed plus interest at 2% above Malayan Banking's base lending rate from Jan 1 2006, until the loan was paid.
Tajudin made counter-claims amounting to some RM13.5bil. These claims are far in excess of the RM589mil in dispute, by over some 20 times. It was filed against 24 respondents, including former Danaharta chief executive Datuk Azman Yahya and former Danaharta officers Datuk Abdul Hamidy Hafiz, Datuk Zukri Samat and Datuk Kris Azman Abdullah.
He had claimed that Tun Mahathir Mohamad, who was Prime Minister then, had ordered him to buy the 32% stake in MAS to bail out Bank Negara Malaysia which had incurred foreign exchange losses. Mahathir denies this.
That's the intriguing tale about this whole issue. It offers a lesson on how corporate Malaysia is run with its close interlinks between big business, Government and politics. It was a refreshing decision to see Danaharta turn around and pursue to the end creditors who have the means to repay their debts.
But this settlement has negated all that and turned the hands of the clock back in terms of progressing to a more transparent and accountable environment with the proper standards of governance in place.
If there is indeed a convincing explanation for this, than it is incumbent upon all parties, and especially Danaharta, which spent money and effort to bring the miscreants to book and got a judgment in its favour, to make this public so that the rest of us understand.
Otherwise, we need to add this to yet another one of those things we must get to the bottom of and do something about.
P Gunasegaram notes that the final amount involved amounts to more than three times that of the RM250mil loan involved in the cowgate (National Feedlot Corp) scandal. (email@example.com)
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