KUALA LUMPUR (March 27): A lawsuit has been filed by the former operator of KL Tower against Lim Seong Hai Capital Bhd's (KL:LSH) subsidiaries and the Malaysian government, challenging the award of the KL Tower concession to LSH Service Master Sdn Bhd.

The former operator of KL Tower — Menara Kuala Lumpur Sdn Bhd — and its parent Hydroshoppe Sdn Bhd are alleging contractual breaches and misconduct that led to the award of the concession to LSH Service Master.

In a bourse filing on Thursday, LSH Capital said its wholly-owned LSH Best Builders Sdn Bhd (LSHBB) had been served with a writ of summons and statement of claim for the lawsuit, together with its 70%-owned LSH Service Master.

Also named as defendants in the suit were its joint venture partner Service Master (M) Sdn Bhd (SMSB), who holds the remaining 30% in LSH Service Master, along with government, the Ministry of Communications as well as its minister.

This came just a day after LSH Capital announced that it planned to rejuvenate the 10-acre area around KL Tower into an integrated destination for tourism, retail and cultural engagement. LSH Service Master had signed a 20-year agreement with the government to operate and maintain Kuala Lumpur Tower and its surrounding areas, which measure about 10.08 acres. The agreement is to take effect from April 1, 2025.

In its latest filing, LSH Capital said the plaintiffs, Hydroshoppe and Menara Kuala Lumpur, are alleging that LSH Capital and its units had induced a breach of a contract that the plaintiffs had agreed to with the government in an Aug 1, 2022 meeting. They are also claiming that LSH and its units had knowingly received and/or committed dishonest assistance, and that the award of the concession to LSH Service Master is void and unlawful. 

The plaintiffs want the concession to be transferred to them, and for the defendants to pay them RM20.13 million in loss and damages, calculated at an annual interest rate of 5%, as well as general damages to be assessed.

The award of the KL Tower concession to LSH Service Master was announced by the government in May last year, following a tender evaluation by the government and the Public Private Partnership Unit (Ukas). According to Communications Minister Datuk Fahmi Fadzil at the time, the decision was made after reviewing tenders and proposals submitted through a request for proposal (RFP) process.

KL Tower, a government-owned asset, has been under scrutiny since 2022, when the Malaysian Anti-Corruption Commission (MACC) launched an investigation into alleged irregularities surrounding the sale of Menara Kuala Lumpur, then a subsidiary of Telekom Malaysia Bhd (KL:TM), to Hydroshoppe in October 2022.

Menara Kuala Lumpur was managing the tower until TM, in October 2021, decided not to renew the concession, citing the tower’s shift from telecommunications services to a tourism and hospitality-focused operation.

Subsequently, in April 2023, both Hydroshoppe and its director Abdul Hamid Shaikh Abdul Razak Shaikh were charged with offering RM500,000 a year for 15 years to then-communications and multimedia minister Tan Sri Annuar Musa to fast-track the takeover of the KL Tower concession by Hydroshoppe. They pleaded not guilty to the charge. 

Meanwhile, LSH Capital said it had engaged legal counsels to defend LSHBB and LSH Service Master against the suit.

"At this preliminary juncture, apart from the amount claimed by the plaintiffs, the corresponding legal costs and such other reliefs as the honourable court deems fit, just and proper, the writ of summons with the statement of claim are not expected to have any other material financial and operational impact on LSH Capital group for the financial year ending Sept 30, 2025," LSH Capital's filing read.

Shares in LSH Capital, which debuted on the ACE Market last Friday, closed half a sen or 0.6% higher at 89 sen on Thursday, giving it a market capitalisation of RM746.1 million. The stock's initial public offering price was 88 sen.

Read also:
Lim Seong Hai Capital secures 20-year concession to operate KL Tower, starts April 1
Hydroshoppe director charged with offering bribes to Annuar Musa for KL Tower concession
Putrajaya awards LSH Capital's JV a 20-year concession for KL Tower operation
LSH Capital plans to transform 10-acre KL Tower area into a tourism, retail and cultural destination