This article first appeared in Corporate, The Edge Malaysia Weekly, on May 30 - June 5, 2016.

AWAY from the public eye, the second- and third-generation of the family of WTK Group's late founder Datuk Seri Wong Tuong Kwang — one of Sarawak’s richest men — are embroiled in a legal tussle over control of the timber business empire he built.

The feud is not widely known as the dispute is taking place at the family's private investment vehicle WTK Realty Sdn Bhd, which held a 13.6% direct shareholding in Bursa Malaysia-listed Sarawak-based WTK Holdings Bhd as at Dec 31, 2015.

On one side are WTK Holdings chairman Pemanca Datuk Wong Kie Yik, 76, and his brother Wong Kie Chie, 69, who is also a non-executive director. On the other are the duo’s sister-in-law Datin Kathryn Ma Wai Fong — widow of the late Datuk Wong Kie Nai, the former CEO of WTK Holdings and second son of Tuong Kwang — and her son Neil Wong Hou-Lianq and daughter Mimi Wong Hou Wai.

The long-drawn-out legal tussle began a few weeks after the death of Kie Nai on March 11, 2013. At the time, Kie Nai was the single largest shareholder in WTK Realty with 8.17 million shares or a 49.8% stake. Together with 800,000 shares representing a 4.88% stake in Hou-Lianq’s name, Kie Nai’s family commanded 54.68% of WTK Realty’s voting rights.

However, Kie Yik and Kie Chie, each holding 22.66% of WTK Realty’s voting rights, contended that of the 8.17 million shares, 5.25 million shares were fraudulently obtained by Kie Nai.

According to people close to the matter, Kie Yik and Kie Chie alleged that 1.25 million shares were fraudulently transferred from Tuong Kwang to Kie Nai in August 2004.

Subsequently, Kie Chie launched the first of a series of lawsuits on March 28, 2013, against Ma as executrix of Kie Nai’s estate, and WTK Realty, to invalidate four million shares issued to Kie Nai on Sept 28, 2007, on the grounds that no shareholders’ approval was given at a general meeting.

However, Kie Chie, in his affidavit on March 27, 2013, acknowledged that before Tuong Kwang passed away, he had transferred the entire 1.25 million shares, representing a 10.9% stake in WTK Realty, to Kie Nai. Kie Chie had said the transfer was approved by Kie Yik and Kie Nai at a board meeting held on Aug 27, 2004.

Also central to the tussle are two logging companies, namely Ocarina Development Sdn Bhd and Harbour-View Realty Sdn Bhd.

Kie Nai’s family, by virtue of its majority shareholding in WTK Realty, has a 29.4% stake in Ocarina, which had an 8.58% stake in WTK Holdings as at Dec 31, 2015. Based on Companies Commission of Malaysia (SSM) data, Ocarina’s total assets stood at RM395.05 million as at July 31, 2012. It posted a net profit of RM13.4 million on revenue of RM133.06 million for the financial year ended July 31, 2012.

Kie Nai’s family also has a 51.85% direct stake and Ma, an 0.08% stake, in Harbour-View. Harbour-View, in turn, owns 1.29% of WTK Holdings’ shares. SSM data shows that Harbour-View’s total assets stood at RM74.55 million as at June 30, 2013. The company posted a net profit of RM2.27 million on revenue of RM30.15 million for the financial year ended June 30, 2013.

Meanwhile, Kie Yik and Kie Chie and their families have substantial stakes in both Ocarina and Harbour-View.

In another dispute, Ma filed a suit against Kie Yik, Kie Chi and Successful Trend Investment Corp (STIC) at the British Virgin Islands (BVI) High Court on May 4, 2015.

STIC, a BVI company, was the holder of three convertible preference shares (CPS) in WTK Realty. The CPS have no voting rights unless converted into ordinary shares. At the material time, STIC was owned equally by the three brothers — Kie Yik, Kie Nai and Kie Chi — through a trustee who held all shares in STIC.

Following the death of Kie Nai, STIC came under the control of Kie Yik and Kie Chi. While Ma is the executor and trustee of Kie Nai’s estate, the articles of WTK Realty did not allow her to attend and vote at general meetings until she was registered as a member. This meant that until she was registered as a member, the only voting member of Kie Nai’s family was his son, Hou-Lianq.

According to people familiar with the situation, Kie Yik and Kie Chi had capitalised on their majority at board level, and temporal majority in general meetings, and decided to increase the paid-up capital of WTK Realty by converting STIC’s CPS into 2.75 million ordinary shares. An emergency board meeting was convened on March 22, 2013, to carry out the conversion exercise on the basis that WTK Realty was required by a bank to increase its paid-up capital as a condition to obtain a banking facility amounting to RM19 million.

The conversion exercise resulted in Kie Nai’s family losing control of WTK Realty and reducing its shareholding to 46.7% from 54.68%. Meanwhile, Kie Yik and Kie Chie and their respective families now control the remaining 53.2% in WTK Realty.

Upon realising what had happened, Ma had filed a suit in the BVI High Court on the grounds of unfair prejudice. Ma is alleging that STIC had operated as a quasi-partnership in the CPS conversion affair. The dispute is still pending in court.

Since then, both sides have filed claims and counterclaims, some of which are on a more personal level. These include whether Hou-Lianq was properly appointed as managing director of WTK Realty, as well as at certain of its subsidiaries. It is understood that altogether, there are 34 ongoing cases at the High Court in Sibu, Sarawak, some of which have been dragging on for three years.

WTK Holdings officials had not replied to email questions from The Edge as at press time. Ma also declined to comment when contacted by The Edge about her ongoing legal tussle with her brothers-in-law.

WTK Holdings is due to convene an annual general meeting on June 3 to seek, among others, a renewal of a share buyback of up to 10% of the group’s share capital, to approve a final dividend of 2.49 sen per share amounting to RM11.89 million for FY2015 and to re-elect Kie Chie as a director. It is noteworthy that the group’s major shareholders are tussling for control at WTK Realty, and ultimately WTK Group.

One of the country’s biggest diversified timber groups, WTK Holdings is involved in six businesses: timber, oil palm and forest plantations, manufacturing, trading, oil and gas and investment holding. The timber division is the group’s biggest profit contributor. 

At its oil palm and forest plantations division, the group’s total matured oil palm plantation area was 4,600ha last year. As for forest plantations, about  8,500ha have been planted to date.

Under the group’s O&G division, WTK Holdings operates a fleet of four accommodation workboats.

The group saw its net profit for the financial year ended Dec 31, 2015 (FY2015), jump 49% to RM59.56 million from RM39.98 million in FY2014, on better performance from its timber and O&G divisions. Revenue grew 7% to RM724.24 million, from RM676.65 million in the previous year.

Its cash and cash equivalents amounted to RM323.51 million as at Dec 31, 2015, while its debt (short- and long-term borrowings) stood at RM310.68 million. 

Year to date, WTK Holdings’ share price has fallen 14% to close at RM1.13 last Friday, for a market capitalisation of RM530 million. 

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