PUTRAJAYA (April 1): Two former directors of CepatWawasan Group Bhd were given three months from Friday (April 1) to repay the company RM13 million used to illegally pay Opti Temasek Sdn Bhd, an action in breach of the financial assistance provisions of Bursa Malaysia's listing requirements.

Failure by Tengku Datuk Kamal Sir Sultan Abu Bakar and Lt Col Tengku Datuk Kamarul Zaman Sir Sultan Abu Bakar to do so would put the brothers in contempt of the court order and makes them liable to five years in jail.

This comes after the Federal Court bench had unanimously dismissed their appeal to set aside the committal proceedings.

Justice Datuk Vernon Ong Lam Kiat, who sat with Puan Sri Zaleha Yusof and Datuk Zabariah Mohd Yusof, ordered them to pay total costs of RM50,000 after their appeal was dismissed.

Tengku Kamal and Tengku Kamarul Zaman had caused CepatWawasan's subsidiary Prolific Yield Sdn Bhd to pay RM13 million to Opti Temasek sometime in 2004, shortly before their removal in August that same year.

CepatWawasan is an investment holding company with its subsidiaries principally involved in oil palm cultivation, milling, quarrying, and sales of oil palm products, and has approximately 10,280 hectares of oil palm plantations in Sabah.

They were eventually fined by Bursa Malaysia Securities Bhd for violating the financial assistance provisions of the bourse's listing requirements for payment made out to Opti Temasek, following a decision by the bourse's listing committee that was subsequently upheld by its appeals committee.

The duo filed a judicial review at the High Court to challenge Bursa Malaysia's enforcement, but it was dismissed by the court on Dec 28, 2010.

The Court of Appeal also upheld the decision in ruling that Bursa Malaysia's enforcement against Tengku Kamal and Tengku Kamarul Zaman under Section 360 of the Capital Market Services Act (CMSA) can be made.

Justice Zabariah, who read the apex court decision, said the bench had refrained themselves from answering the questions posed before them, including Tengku Kamal being a bankrupt, just before Bursa Malaysia's action, and whether Bursa should get leave from the director-general of Insolvency pursuant to Section 8(1) of the Bankruptcy Act in the action.

The apex court judge said such questions were not posed before either the High Court or the Court of Appeal, and it would be improper for the bench to second-guess the lower courts when this was not brought up earlier.

“This issue raised through the question of law was never raised in the court and the three questions do not relate to the determination of the Court of Appeal's decision. Hence, based on (case laws), the court is of the view that it need not be answered,” she said.

Bursa as frontline regulator tasked in maintaining integrity

The bench also ruled that the bourse has the power to enforce the provisions under Section 360 of the CMSA, which stipulates the power of the court to make such orders on Bursa Malaysia's application.

Bursa Malaysia, Justice Zabariah added, is the frontline regulator of the Malaysian capital market and is tasked with maintaining the integrity of the stock exchange by ensuring compliance with the listing requirements and ensuring proper governance.

“Bursa Malaysia had found that the defendants’ conduct in causing Prolific Yield Sdn Bhd to make payments to Opti Temasek Sdn Bhd and a Sheikh Abdul Rahim were in breach of the financial assistance provisions in Bursa’s LR [listing requirements]. Hence the Section 360 order is made against the defendants.”

“Section 360 of the CMSA allowed Bursa Malaysia to seek appropriate orders from the court, so that persons in breach of the LR can be compelled by the courts to remedy the breach. This, Bursa Malaysia did through the Section 360 Order,” the federal court judge said.

She said looking at the terms of Section 360, they do not require the defendants to pay Bursa Malaysia. Instead, they compelled the defendants to restore to CepatWawasan's monies that were wrongly paid.

“The defendants (Tengku Kamal and Tengku Kamarul Zaman) failed to comply with the Section 360 CMSA Order, both at the High Court and affirmed by the Court of Appeal. It is to be noted they have not given any reasonable explanation as to why they could not comply with the Section 360 CMSA Order at the hearing of the committal proceedings.

“The order does not require them to make payment to Bursa Malaysia within a stipulated time or otherwise but rather to restore to CepatWawasan, monies which were wrongfully paid out by Tengku Kamal and Tengku Kamarul Zaman, as directors of the defendant company, within a stipulated time period,” Justice Zabariah said.

The Federal Court judge added that the appeal before the three-member bench was on the committal proceedings against them made by the High Court on July 1, 2016, and affirmed by the Court of Appeal on Feb 13, 2017.

“It is never to consider whether the Section 360 CMSA order was valid or not. Hence, it is not for this court to consider the validity of the Section 360 CMSA order (which was dated Dec 28, 2010, following the high court decision) at this stage, when this issue was never addressed at all in the court below,” she said.

After their appeals were dismissed, counsel for Tengku Kamal and Tengku Kamarul Zaman, Datuk Malik Imtiaz Sarwar said his clients were bankrupt and would not be able to cough up the amount needed to repay the company, which would result in them facing a five-year jail term.

Justice Ong responded that they must find a way to pay the amount.

“They found themselves to be in the situation where they are in,” the judge added.

The High Court had initially imposed a fine on the duo, but on appeal by Bursa Malaysia at the appellate court on Feb 27, 2020, the sentence was changed to a jail term of five years if they do not comply in paying the RM13 million sum within three months.

Bursa Malaysia was represented by Preetha Pillai, Nimalan Devaraja and Muhammad Suhaib Mohamed Ibrahim from Messrs Skrine.

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Court dismisses former Cepat directors’ application