KUALA LUMPUR (March 21): Erdasan Group Bhd (KL:ERDASAN), formerly known as AT Systematization Bhd, is taking legal action against suspended executive director Mak Siew Wei, alleging fraud.

According to the writ and statement of claim filed at the Shah Alam High Court, Erdasan is suing Mak for equitable fraud for diverting RM46.47 million of company funds to various third parties without any valid justification.

In the legal action, Erdasan is seeking a declaration that Mak is a constructive trustee holding the alleged amount, and that his assets and properties should be traced and used to settle his RM46.47 million debt to the company.

Alternatively, the company is asking Mak to pay the sum of RM46.47 million as compensation for special damages suffered.

Erdasan is also asking for general, exemplary and aggravated damages, as well as judgement interest at an annual rate of 5% from the date of judgement until full payment. It is also requesting costs on a full indemnity basis.

The company said its lawyers will try to serve legal papers to Mak as soon as possible, despite him being unreachable.

Last Tuesday (March 11), Erdasan said it had suspended Mak as an executive director of the company pending an investigation into possible questionable transactions that occurred in 2020 and 2021.

Mak, who has been a board member since 2013, is the largest shareholder of Erdasan, holding a 7.835% stake in the company.

The company's shareholdings are highly fragmented, with other substantial shareholders, mostly individuals, each holding stakes of less than 1.6%.

Mak had previously served in executive director roles at Pasukhas Group Bhd (KL:PASUKGB), AE Multi Holdings Bhd (KL:AEM) and Trive Property Group Bhd (KL:TRIVE), stepping down from each role late last year.

In June 2020, AT Systematization ventured into the glove business via its acquisition of rubber glove manufacturer Pearl Glove (Malaysia) Sdn Bhd. The company planned to install and commission up to 20 production lines within a span of 36 months, aiming for a production capacity exceeding 3.2 billion pieces annually.

The company has been struggling with financial losses since 2016.

For the nine months ended Dec 31, 2024 (9MFY2025), Erdasan recorded a net loss of RM17.92 million, reflecting a significant widening of its financial deficit. Revenue declined by 17%, falling to RM22.98 million from RM27.72 million in the same period a year earlier.

The decrease in revenue was primarily driven by reduced sales in the fabrication and automation segment, alongside the cessation of glove-making operations.

Erdasan shares ended at nine sen on Friday, giving the company a market capitalisation of RM20.6 million.

This is a stark contrast to its peak market capitalisation of RM878 million more than four years ago in November 2020, during the glove frenzy.

In January 2024, the company undertook a 30-to-one share consolidation exercise.

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Erdasan suspends executive director amid probe into dubious transactions