High Court orders Bank Pembangunan's RM565m fraud, bribery suit against former MD's estate, 28 others to proceed to trial

Monday 20 May 2024

KUALA LUMPUR (Jan 23): The High Court here has ruled that Bank Pembangunan Malaysia Bhd's lawsuit alleging fraud and bribery against 30 individuals and entities in connection with a RM400 million loan it granted to Aries Telecoms (M) Bhd in 2012 should proceed to trial.

Two of the defendants are the joint administrators of the estate of the bank's late former president and managing director, Datuk Mohd Zafer Mohd Hashim, who passed away in July 2022.

Judge Atan Mustaffa Yussof Ahmad rejected the defendants' applications to dismiss the suit last Friday (Jan 19), saying it is not a plain and obvious case, and that there are numerous disputed facts and triable issues that can only be properly dealt with at a full trial, based on the broad grounds of his decision sighted by The Edge.

At the same time, he dismissed the bank's Mareva injunction application to freeze the assets of all but one of the 30 defendants, saying the bank had failed to demonstrate that there is a real risk or possibility of the defendants dissipating their assets to frustrate any potential judgement that warrant imposing the injunction. The case's 30th defendant — the bank's former senior vice president and head of business banking Zakaria Saad — was not involved in the injunction.

The court had previously granted the bank's application for an ex parte (for the interest of one party only) asset freeze order against 28 of the defendants, including Silver Ridge Holdings Bhd (SRHB), Silver Ridge Sdn Bhd (SRSB) and its director Wong Chee Keong.

Messrs Cheang & Ariff, who represented SRSB and SRHB, confirmed the proceedings when contacted.

"The High Court has dismissed the bank's Mareva application on inter partes (both parties) basis and the ex parte injunction order against SRHB and SRSB is no longer in force and enforceable," said Muhammad Hiqmar Danial, a senior associate with the law firm.

The bank's lawyer had sought an Erinford injunction to maintain the status quo of the ex parte asset freeze, pending an appeal of the inter partes Mareva injunction. However, this was dismissed on the same day, he added. The bank was represented by Messrs Lim Chee Wee Partnership.

Other defendants in the suit include: Sidqi Ahmad Said Ahmad, Wan Alias Wan Ngah, Aries' alleged shadow director Shailen Popatlal, former Aries director Roslina Ibrahim, former Aries group MD and director Datuk Wira Ranjeet Singh Sidhu, Paneagle Sdn Bhd and its director Abdul Wahid Abdul Ghani, Open Fibre Sdn Bhd and its director Mohd Radzi Mohamed, and Orient Telecoms Sdn Bhd and its directors Mustafa Ali Zaminali Sayed, Muhammad Shazhakim Shazarul Hisham and Shaza Arina Shazarul Hisham — the latter two are Roslina's son and daughter respectively.

Also named in the suit are: BVS Trinity Sdn Bhd and its director Abd Hadi Abd Majid, Zavarco plc and its director Tunku Mazlina Tunku Abd Aziz, alleged payment intermediary Datuk Noorusa’adah Othman, Paneagle Holdings Bhd, Primawin Ltd, China Finance Ltd, Hadron Equities Ltd, VCB Malaysia Bhd and VCB Investment Bhd.

MACC's 'no further action' after Mohd Zafer's death not an impediment

According to the filing, several of the defendants have made an application, under Order 33 of the Rules of Court 2012 that deals with the determination of a preliminary issue in a civil action, to determine if civil courts have jurisdiction to decide or declare a criminal wrong as the case involved alleged bribery.

They wanted to know whether a determination of bribery can be made by the civil courts if the Malaysian Anti-Corruption Commission (MACC) had concluded 'no further action' on a case, and if a key witness is unavailable due to Mohd Zafer's death. If not, they wanted to know whether the causes of actions and allegations against certain defendants should be struck out.

"On the question of whether the civil courts have jurisdiction to determine criminal wrongs, with respect, I accept the arguments by the plaintiff. Caselaw has shown that civil claims alleging bribery as a cause of action is permissible and the standard of proof applicable is the civil standard of balance of probabilities rather than the criminal standard of beyond reasonable doubt.

"Further, I find that the determination of this question will not resolve the suit or lead to a substantial disposal of this action — the other claims not related to bribery will still have to proceed to trial and be heard in full," the judge said.

On the MACC's 'no further action' finding regarding the allegations of bribery against Mohd Zafer, the judge noted that the defendants argued that this, coupled with Mohd Zafer's death, called into question the sustainability of the bribery claims against them.

"I am unable to accept this contention. Given the civil nature of the present proceedings, the plaintiff only needs to prove bribery on a balance of probabilities based on the available evidence. The evidentiary burden here is not as heavy as that in a criminal prosecution. Further, I note that there are no criminal proceedings against any defendant as of now. The question as framed will therefore not lead to a substantial disposal of the action," the judge added.

The judge also said that the bank's cause of action is premised on civil claims for bribery to recover the bribe monies, to which the civil burden of proof applies.

"The fact that no prosecution was initiated or that the MACC concluded 'no further action' is not a bar to the plaintiff's right to pursue civil remedies," he said, citing a precedent case.

"Hence, there is no impediment to this court to determine the bribery allegation," he said, adding Mohd Zafer's passing does not prejudice the defendants' right to a fair trial as the plaintiff would still have to prove its claims against the defendants based on documentary evidence and witness testimonies.

"There exist disputed facts, including on the existence of a Quistclose Trust and ownership of monies. These require full ventilation at trial with examination of witnesses and documents. Hence, determining the issues summarily under Order 33 would instead incur further costs and delay final resolution," he added.

In the lawsuit Bank Pembangunan initiated in 2022, the development financial institution is seeking at least RM564.99 million in losses and damages against the defendants for allegedly conspiring and using unlawful means to defraud the bank — in relation to the RM400 million loan given out to Aries in 2012 to partly finance a RM1.3 billion project to install a fibre optic network around Peninsular Malaysia — and for concealing such fraud and its proceeds from Bank Pembangunan.

According to Bank Pembangunan, the loan was disbursed to Aries without fulfilling the necessary conditions. The money was then allegedly “siphoned and/or unjustifiably transferred” to other entities, it claimed, including Paneagle Holdings, BVS Trinity, VCB Malaysia, Orient Telecoms and/or Primawin.

Edited ByTan Choe Choe

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