KUALA LUMPUR (Oct 6): The Federal Land Development Authority (Felda) and its investment arm, Felda Investment Corporation Sdn Bhd (FIC), claim that 21 individual had conspired to defraud them of over RM1 billion in land and exposed them to RM1.7 billion in potential liabilities through the Kuala Lumpur Vertical City (KLVC) project.
Felda and FIC made these allegations in a civil suit against the 21 over a 2014 master development agreement involving 20.066 acres of prime land along Jalan Semarak. Hearing of the suit commenced at the High Court here on Tuesday, seven years after it was initiated in 2019.
The defendants include former Felda chairmen Tan Sri Mohd Isa Samad and Tan Sri Shahrir Samad, several former Felda directors general, master developer Synergy Promenade Sdn Bhd (SPSB), Synergy Promenade KLVC Sdn Bhd (SPKLVC) and lawyers.
Felda and FIC’s counsel Kumar Kanagasingam said in his opening statement that the defendants had conspired to cause the agencies to enter into a series of questionable agreements and instruments to develop the land.
Kumar said evidence would show that SPSB’s appointment as master developer had been predetermined before the boards of Felda and FIC deliberated on the decision.
He said SPSB was the only party to submit a proposal for the KLVC project, while the FIC board was led to believe at a January 2014 meeting that several papers were under consideration.
Kumar said the other proposals on record were sham submissions from companies owned by Abdul Rahman Soltan, a director and shareholder of SPSB and SPKLVC.
FIC was, therefore, induced to appoint SPSB as master developer on Jan 24, 2014, he said.
The plaintiffs allege that the land’s commercial value of RM1.062 billion was undercut by a development agreement that capped returns at RM500 million.
The fraudlent scheme allegedly involved SPSB directors transferring land titles to themselves and related entities without payment to Felda.
Separately, FIC was allegedly locked into a high-risk office leasing agreement that could expose it to an estimated RM1.7 billion in rental liabilities.
Kumar said the KLVC project was engineered to enrich the Synergy Group at Felda and FIC’s expense.
The plaintiffs are seeking the recovery of title and possession of all 24 parcels of land, damages for fraud, breach of fiduciary duty and dishonest assistance, and the dismissal of SPSB’s counterclaim.
The first witness called was Mohamed Ghouse Shajahan, 52, who served on Felda’s board from July 26, 2018, to July 25, 2023.
Kumar appeared for Felda and FIC alongside Mong Chung Seng, Wong Han Wey and Medha Ong.
SPSB and SPKLVC are represented by RK Sharma, Amrit Pal Singh, Ng Jun Wei, Harmander Singh and JS Chew.
In an email interview with The Edge in 2018, Synergy Promenade said that it transferred part of the land to its name “within the four corners of the agreements” entered by the group, Felda and FIC in order to obtain financing to be secured by first-party charges over the land.
The company added it was granted power of attorney as the developer and Felda would receive “a minimum of RM500 million or 10% of the gross development value, whichever is higher”. The value of the land was “estimated to be around RM150 million to RM200 million”, the company said at the time.
In March last year, Sharir read a statement in the High Court where he affirmed that the Felda land transactions and the subsequent re-transfer are "free from any vitiating factors".
The statement was jointly issued with Synergy Promenade's Abdul Rahman, as part of a consent judgment in a defamation suit filed by Synergy Promenade. Both Abdul Rahman and Shahrir are named in Felda and FIC's civil action.