According to news reports, Andrew had said during the trial that he had facilitated a meeting between Anwar and former inspector-general of police (IGP) Tun Haniff Omar in 1993. He also said he had known Anwar since the 1980s and the former IGP for 17 years and was part of his badminton group.

During the trial, Anwar’s lawyer, the late Christopher Fernando, had also commented on Leong’s close association with former domestic trade and consumer affairs minister Datuk Seri Megat Junid Megat Ayob and even former prime minister Tun Mahathir Mohamad.

In his heyday, Andrew was also associated with billionaire Tan Sri Quek Leng Chan of Hong Leong Group fame. He was previously on the board of TT Resources but resigned in 1999.

Despite his supposedly close association with high-profile personalities, however, Andrew has always kept a low profile.
Hence, it came as a surprise when his name cropped up as the largest shareholder in Maxbiz, a company with more than its fair share of problems that go beyond its balance sheet.

However, considering that Andrew was instrumental in appointing Datuk Vincent Leong to Maxbiz, he must have something planned for the company, although what it is remains unclear.

According to the company’s 2008 annual report, Andrew had 42 million shares or a 29.5% stake in Maxbiz.

To recap, Maxbiz came about from the reverse takeover (RTO) of Geahin Engineering Bhd. Its two main assets were held by subsidiaries Mayford Garments Sdn Bhd and MKK Industries Sdn Bhd, both of which were involved in the garment industry.

Maxbiz inherited Geahin’s fabrication yard in Batu Berendam, Melaka, whose assets were used as collateral for an issue of RM22.6 million in redeemable convertible secured loan stocks (RCSLS) to Geahin’s creditors.

Andrew emerged as a shareholder in Maxbiz on Jan 27, 2006, with a 6.33% stake or nine million shares. From then, he acquired large blocks of Maxbiz shares via off-market deals from Capital Line Sdn Bhd and Inno Option Sdn Bhd and their shareholders until he reached his current shareholding level in April 2006.

In a brief meeting with The Edge a few weeks ago, Andrew said Maxbiz had looked like a good investment. “The company’s debts were only RM4 million or so; it had low gearing. It looked like a good investment at the time,” he said.

Another shareholder of Maxbiz, SJ Asset Management, with a 15% stake, saw bright prospects in the textile industry. Its managing director Tan Whai Oon said it was not a sunset industry as widely perceived.

Tan alluded that there was no certainty that Maxbiz had Geahim’s assets when SJ Asset Management bought into the former.
An excerpt of the interview with Tan follows:

How did SJ Asset Management get into Maxbiz? What was Maxbiz’s  appeal?
Tan: This block of shares is held on behalf of clients. When the restructuring [of Geahin] was taking place, some clients approached us and asked us to do an assessment of the proposed restructuring for them to consider.

Being a fund management house, we do have in-house research. As there was not much earnings track record, one major consideration you would look at is their net tangible asset, what sort of asset backing they have, what sort of downside, what sort of risk you are looking at.

We were relying on the assumption that the company’s assets were intact. That was the basis on which we said it was okay to buy into Maxbiz.

If the assets had been missing from the very beginning, should the restructuring have happened in the first place?
So, on behalf of the clients, we are going to sue those involved who had not taken due care. If we had known from the beginning, we would not have come to a decision to invest in the company.

We came in when they were doing the placement… from day one before they listed.

Why are you acting only now? In October 2005, when they failed to redeem the loan stocks, were you not suspicious? Didn’t it raise any red flags? In between, there were also legal suits that were filed.

We realised something was amiss sometime ago; I don’t remember exactly when but when they [Maxbiz’s former management] failed to meet some of their promises to us. 

Actually, it is not that easy. We were not in control. Until some of the other investors came forward and joined forces with us, we were not in the majority… eventually, we got the majority, so that’s when we were able to push our plan to replace the board and form a new independent board.

It’s difficult to get onto the board and there is no way you can investigate until you get someone on the board. When we gathered enough shareholder support, we basically removed all the board. There is no way you can see the books unless you have management control.

You mean SJ Asset Management has 15% and you don’t have any board representation?
We didn’t then but now we do. For a listed company, we don’t normally ask for board representation. There is supposed to be much more transparency in listed companies; there is supposed to be corporate governance and independent board members.

We are just investors, not strategic investors, just financial investors… so, why should we meddle with what they are doing?

How did your clients come into the picture? How is it that they wanted to come into Maxbiz?
It is very complicated. Some independent parties representing them came in. I don’t think we should disclose anything. But they relied on the accuracy of the memorandum.

They asked us to look at the procedures, look at whether the prices at which they were buying was commensurate with the value.

In 2004, the garment business was already a sunset business, so why did your clients come into Maxbiz?  
That is not true. The garment business runs on quotas. Malaysia has its own quota, every country has its own quota. If you study the business, you will realise that it is a very steady business.

Each country in the world has its own quota, so the earnings are recurring. From the projections, the business was supposed to be steady… This was before it was injected into Maxbiz.

It is not a growth industry as you cannot grow beyond your quota, but what happens is that some small players cannot do the business so they shift the quota over to us.   

What do you plan to do now?
We plan to take action. We plan to take up a shareholder suit on the people we believe are responsible for all this. Obviously, we have to consult our lawyer. We can’t say anything until our lawyer tells us how to proceed.

This article appeared in Cover Story page of The Edge Malaysia, Issue 768, Aug 17-23, 2009.