Primus files appeal over NY court’s refusal to hear claim


  • Business
  • Thursday, 20 Sep 2018

Hong Kong-based Primus alleged that it was disadvantaged by advice Goldman gave concerning the December 2009 sale of EON Capital Bhd, a Malaysian bank that Primus had a 20% stake in. EON Capital was sold to a domestic rival Hong Leong Bank Bhd

PETALING JAYA: Private equity firm Primus Pacific Partners has lodged an appeal over a New York court’s refusal to hear its US$500mil claim against Goldman Sachs for issues related to the 1Malaysia Development Bhd (1MDB) scandal in Malaysia, reports the Financial Times (FT).

Hong Kong-based Primus alleged that it was disadvantaged by advice Goldman gave concerning the December 2009 sale of EON Capital Bhd, a Malaysian bank that Primus had a 20% stake in.

EON Capital was sold to a domestic rival HONG LEONG BANK BHD (HLBB), which had close ties to the-then Malaysian prime minister Datuk Seri Najib Tun Razak.

“Primus alleged that Goldman encouraged EON Capital to accept a poor bid because of the US bank’s close relationship with Najib. That relationship came under scrutiny from summer 2015 after allegations of serious crimes at Malaysian development fund 1MDB, which Najib founded,” said the report.

It added that in November, a state court in Manhattan said Primus’ case could not be heard there because it has “no substantial nexus with New York”.

The FT reported that on Friday, Primus lodged an appeal to the New York court of appeals. The appeal argues that the case should be heard in New York because “multiple employees of the New York-based bank participated in the conduct giving rise to the claims” and “the New York-based bank and its employees are the subject of multiple criminal and regulatory investigations by federal and state law enforcement agencies in New York”.

“The only evidence in the record that disclaims a substantial nexus with New York are self-serving, untested affidavits submitted by defendants which contradict their own previous statements,” the appeal added.

The FT added that Goldman had until the end of October to make its reply. A spokesman told the FT: “We are confident that the appellate court will agree with the trial court’s conclusion that this claim does not belong in the New York courts.”

Malaysia’s courts do not recognise Primus’ status as a claimant since EON Capital no longer exists.

For some background, Primus was allowed to buy a strategic stake in EON Capital back in 2007, and this eventually led to some complications.

Primus, which was at that time the single largest shareholder of EON Capital, was against the sale of EON Capital to HLBB in 2009, partly because it had bought its 20.2% stake in the banking group at a high price. It went all out to block the deal.

It took some 17 months for the deal to close, during which Primus took the bank and its directors to court to challenge the takeover.

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Business , Primus , Partners , EON , Hong Leong , 1MDB , Najib , New York ,

   

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