Sime files RM177m suit against ex-CEO, four others
The E&U division racked up over RM2 billion in losses across four projects.
KUALA LUMPUR, Dec 23 – Troubled conglomerate Sime Darby Bhd filed a lawsuit today against former chief executive officer Datuk Seri Ahmad Zubir Murshid and four other key officials over the RM2.1 billion losses incurred in three projects.
It sought RM177 million in damages for the losses.
The government conglomerate also sued Datuk Mohamad Shukri Baharom, the former executive vice-president of the Energy & Utilities Division; the division’s chief financial officer, Abdul Rahim Ismail; the division’s oil and gas unit chief, Abdul Kadir Alias; and Mohd Zaki Othman, from Sime Engineering.
“They have all been sued for breaches of duties owed to the Sime Darby Group,” the company said in a statement released this evening.
It said the suit is to recover losses suffered by the Sime Darby Group in the Qatar Petroleum Project (QP), the Maersk Oil Qatar (MOQ) Project and the project which concerns the construction of vessels for use in the MOQ Project, known as the “Marine Project”.
“The Sime Darby Group is claiming from the defendants, inter alia, restitution for monies wrongfully paid out, damages for losses suffered, loss of profit, aggravated damages and costs,” it added.
In its statement of claim, Sime Darby alleged that the five accused acted as a “decision-making unit” in the energy and utilities division and were responsible for the division’s actions and omissions.
Sime Darby further alleged that the accused had been grossly negligent for allowing Sime Darby Engineering to pursue engineering, procurement, construction, installation and commissioning (EPCIC) projects in which it had no prior experience.
Ahmad Zubir, Shukri, Abdul Rahim, Abdul Kadir and Zaki were also accused of awarding EPCIC jobs to similarly inexperienced subcontractors and for failing to pursue claims for work not done.
Sime Darby will be represented by Zaid Ibrahim & Co as its solicitors, with veteran lawyer Tommy Thomas as its counsel.
The law firm had been appointed to conduct the legal investigation into losses suffered in the projects.
Today’s suit follows Sime Darby’s announcement in September that a forensic audit into the energy and utilities division had established a prima facie case of foul play and a failure to carry out duties and obligations.
Sime Darby’s woes first came to light in May when then-chief executive Ahmad Zubir was asked to take a leave of absence prior to the expiry of his contract following the discovery of RM964 million in cost overruns from the four energy and utilities projects.
The massive cost overruns bled the division and led to the announcement of Sime Darby’s first ever quarterly loss of RM308.6 million that same month.
In the previous corresponding quarter, Sime Darby had posted a profit of RM150.6 million.
The energy and utilities division, which contributed only 0.7 per cent to the group’s total operating profits in fiscal 2009, posted a loss of RM1.02 billion in the nine months to March, and a net loss of RM910 million for the third quarter of 2010.
The losses were the first since its formation in 2007, when it was merged with two other government-controlled plantation groups.
Analysts have said Sime taking action against the Zubir and other officials will mark a big step in improving the company’s image with investors and signal that more reforms are in works for Malaysia’s largest planter by assets.
New chief executive Datuk Mohd Bakke Salleh, a close ally of Prime Minister Datuk Seri Najib Razak, has pledged to restructure the firm’s businesses to allow for more board oversight.
Bakke has previously said that the company does not rule out divesting some of its businesses should they continue to drag on Sime’s profits, moving away from an earlier stance that it would keep its conglomerate model.
Sime shares edged 0.1 per cent lower to close at RM8.72, compared to the broader market that declined 0.6 per cent.