KUALA LUMPUR (May 8): Interim liquidators appointed by the Shah Alam High Court, pursuant to a petition by Hitachi Ltd to look into the affairs of its wholly-owned Fusiotech Holdings Sdn Bhd, are investigating claims of potential diversion of business by Fusionex Malaysia to third parties.

In the report by interim liquidators Khoo Siew Kiat and Eddie Goh Hua Ying, which was submitted to the court on April 30, 2024, it was disclosed that insufficient bank balances were found in Fusionex Malaysia, with information on the record also scarce.

Fusionex Malaysia refers to the 13 companies under the group placed under interim liquidation on Dec 27, 2023.

“…the ILs (interim liquidators) had on Jan 31, 2024 informed the employees that they (Fusionex Malaysia) would be ceasing operations and therefore, terminate the services of all employees with one month's notice.

“The last day of employment for all employees was on Feb 29, 2024. During the period leading up to the employees' last day, the ILs collected laptops and electronic devices that were in their possession and carried out exit interviews.

“During some of the exit interviews, the interim liquidators were informed that there could be potential diversion of businesses in the past, to third parties. The interim liquidators are still currently investigating these claims,” the report in the winding-up petition stated.

On Monday (May 6), the High Court in Shah Alam ordered the winding-up of the 13 companies in Fusionex Group as petitioned by Fusiotech Holdings Sdn Bhd, which is wholly-owned by Hitachi.

The order was given by Judicial Commissioner Datuk Raja Rozela Raja Toran following proceedings conducted online on Monday.

Interim liquidators Khoo and Goh were appointed as joint and several liquidators for the winding-up.

Venetian Macau Ltd, represented by Skrine, held a watching brief in the winding-up proceedings against Fusiotech Holdings by Hitachi. It is understood that Venetian Macau had been a customer of Fusionex Group.

Besides Fusiotech Holdings, other companies that comprise Fusionex Group that were wound up include Fusionex Technology Sdn Bhd, Fusiotech Solutions Sdn Bhd, FX DFTZ Eservices Sdn Bhd, Fusionex Connect Sdn Bhd, Fusionex Solutions Inc Sdn Bhd, Fusionex Innovations Sdn Bhd and Fusionex Corp Sdn Bhd.

Others include Fusionex Trade Sdn Bhd, Fusionex Capital Sdn Bhd, ADV Fusionex Sdn Bhd, Fusionex Academy Sdn Bhd and FX Cloud Sdn Bhd.

The petitioner and Hitachi were represented by Rahmat, Lim and Partners.

The companies that were wound up were each told to pay RM5,000 costs.

The interim liquidators’ report sighted by The Edge further said the cessation of business and termination of employees were carried out in the interest and in consideration of the financial position of Fusionex Malaysia.

“This consideration was made to put a stop and avoid the further accrual of liabilities due to the lack of visibility of any income for the Fusionex Group. Moreover, the ILs have determined that it is impossible for the Fusionex Group to continue carrying on its business without the complete financial records, information, details and copies of contracts, customer base, technical support, knowledge of the operation involving Fusionex Group and access to Fusionex IT server,” the report stated.

Hitachi Group acquired Fusiotech Holdings as part of its group-wide acquisition of the Fusionex group of companies from Fusionex International Plc in 2020.

Fusionex International is a vehicle owned and controlled by Datuk Seri Ivan Teh.

Before the completion of its acquisition, Hitachi said in its winding-up petition filed on Dec 21, 2023 that Teh was supposed to provide documents related to the company, but these were not forthcoming.

“Fusionex International was recognised as a Big Data and AI technology market leader in the Asian region, providing AI and data analytic services. Fusionex International and its group of companies supposedly had highly skilled data professionals who were knowledgeable in different domains and Fusionex International had been offering SaaS-based services to more than 11,000 SMEs in Asia,” Hitachi said.

Fusiotech Holdings was incorporated following a restructuring exercise in which Fusionex International moved 20 entities out of its 23 entities under Fusiotech Holdings as a condition under the sale and purchase agreement.

These 20 entities, and Fusiotech Holdings, which Hitachi acquired from Fusionex International, are collectively known as Fusionex Group that includes Fusiotech Holdings, with Teh becoming CEO of Fusionex Group.

It added that while Hitachi was the sole shareholder of Fusionex Group and Fusiotech Holdings, it had no reason to distrust Teh. But he and management refused to provide further information and an audit request.

Hitachi was also not aware of Fusionex Group’s dire financial condition until September 2023, when it was informed of a sharp drop in sales and the following month, Teh informed Hitachi of two options to address the matter.

Option one involved cost-cutting while option two entailed a shareholder capital injection of US$100 million to US$150 million (RM474.6 million to RM711.9 million) by mid-November to stabilise the group. According to Hitachi, management recommended option two.

However, this did not materialise as Hitachi said it needed relevant information for the funding to be approved and set out certain pre-conditions for the funding, which were not addressed.

On Dec 4, 2023, Hitachi said it received an email on the resignation of Teh and Fusionex Group’s management. 

On Dec 20, 2023, the company passed a special resolution that Fusiotech Holdings and other companies be wound up under Section 465(1) (a) of the Companies Act 2016, leading to the petition being filed at the end of the month.

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