KUALA LUMPUR (Aug 20): Pestec International Bhd (KL:PESTEC) said it has sued former members of its management as well as two of its China-based suppliers for alleged fraud and conspiracy.

The suit relates to “highly dubious transactions, inflated invoices and exorbitant payments” allegedly made by Pestec to its suppliers Shandong Power Equipment Co Ltd (SPECO) and Shandong Electrical Engineering & Equipment Group Co, according to a bourse filing on Thursday. 

The company claimed irregularities in supporting documents and the purported use of an undated and unauthorised parent corporate guarantee to impose liability on Pestec and support SPECO’s payment claims.

The filing did not disclose the names of the former members of management named in the suit.

In the suit, Pestec is seeking declarations and orders to determine the validity and enforceability of a parent guarantee company purportedly executed by a former member of the company’s previous management and former secretary under the company’s seal without the then board’s approval.

No further details of the suit were disclosed in the filing.

Before filing the suit, Pestec said it had lodged police reports following its internal findings on the irregularities and discrepancies.

“The police have confirmed that investigations are currently ongoing,” it noted.

The suit and the police reports, Pestec noted, are part of the company’s ongoing efforts to protect its interest and to ascertain its legal rights in respect of the purported parent guarantee company and the underlying transaction.

“The company does not expect any material impact on the financial and operations of the company arising thereon save for the legal costs and expenses incidental to the proceedings,” it said.

Pestec was previously involved in arbitration proceedings with SPECO, initiated in October 2024.

The company received four notices of arbitration from SPECO seeking the remaining 10% contract price under purchase agreements. The purchase agreements pertain to autotransformers and power transformers supplied by SPECO for the Lachau, Junjung, Sibiyu and Olak Lempit projects.

The matter was settled in November 2024 with Pestec to pay SPECO 2.52 million renminbi (RM1.52 million). The arbitration proceedings were withdrawn after the first monthly instalment of the settlement was paid in January 2025.

Shares of Pestec closed unchanged at six sen on Thursday, valuing the company at RM142.48 million.