Newsbreak: Partners in one of the country’s biggest law firms in bitter feud

This article first appeared in The Edge Malaysia Weekly, on February 17, 2020 - February 23, 2020.
Newsbreak: Partners in one of the country’s biggest law firms in bitter feud
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LEE Hishammuddin Allen & Gledhill (LHAG), one of Malaysia’s biggest law firms, appears to be involved in a dispute of an unprecedented scale that could see the firm split and possibly dissolved.

The conflict has also raised concerns over the possible delay and fate of a number of high-profile cases.

LHAG is representing the Inland Revenue Board in its suit to claim RM1.69 billion in unpaid taxes from former prime minister Datuk Seri Najib Razak in connection with a 1Malaysia Development Bhd matter, and it is also representing Felda and Felda Global Ventures Bhd (FGV Bhd) in three different law suits.

How did the crisis at LHAG, described as reaching “the point of no return”, start?

From what The Edge has managed to gather, one of the firm’s founding members — Datuk DP Naban (real name Palpanaban Devarajoo) and another partner Ooi Bee Hong — filed an originating summons on Feb 7 against 12 of its full partners, of whom five are in the Partners Committee. The Partners Committee wants to implement three resolutions — related to the tax treatment of money — which were passed by them pending the hearing of the final determination of mediation and possibly arbitration.

Naban and Ooi are seeking an injunction to bar the defendants from implementing the three resolutions, that are essentially about obtaining tax advice from tax consultants on the treatment of money received by Naban and Saravana between 2009 to 2019. Emails attached in the affidavit sighted by The Edge reveals that it involves a sum of RM22.5 million, that had been collected and kept in the client’s account.

Naban and Ooi claim that the resolutions cannot be passed by a simple majority but must obtain 75% of the voting shares, which they claim was not fulfilled.

The defendants named by Naban and Ooi as sighted in documents are Tay Weng Hwee, Andrew Chiew Ean Vooi, Adlin Abdul Majid, G Vijay Kumar and Sean Yeow Huang Meng, who are members of the Partners Committee, and Datuk Nitin Nadkarni, Kumar Kanagasingam, Lambert Rasa-Ratnam, Mong Chung Seng, SM Shanmugam, Datuk T Thavalingam and Aaron Gerard Sankar.

However, the Partners Committee and the other defendants claim that a simple majority would suffice.

The originating summons sighted by The Edge also reveals that Tay had wanted to refer a purported dispute relating to resolutions on treatment of money in the client’s account to the Asian International Arbitration Centre, but Naban had disagreed. Ooi has affirmed in an affidavit her support of the originating summons.

Meanwhile, on Feb 7, three partners — Saravana Kumar, Rosli Dahlan and Ong Eu Jin, who are named as defendants together with Naban and Ong in a separate suit — sent out notices to dissolve the firm, citing the failure to resolve the dispute through mediation and arbitration. The Notice of Dissolution of Partnership by Saravana, which went viral on social media, read: “In light of the on-going mistrust and loss of confidence amongst ourselves, I see no point in continuing with the partnership and I do not wish to do so.”

Two days later, on Feb 9, a statement was issued by LHAG, signed off by the Partners Committee, raising its concerns over the messages that the firm will be dissolved. The statement gave its assurance that LHAG had not been dissolved and that business continued as usual. It added that the partnership could only be dissolved by a resolution passed by 75% of the equity partners and that no such resolution had been passed.

On Feb 10, the 12 lawyers sought an ex-parte injunction against Saravana, Ong, Rosli, Naban and Ooi, to restrain them from giving effect to the Notice of Dissolution as well as the appointment of receivers and managers and to restrain them from disrupting the business operations and from publicising discussions pending an arbitration.

This injunction was sought pending the resolution of an originating summons by the 12 who questioned the attempt to dissolve the partnership by sending out separate dissolution notices without first seeking the requisite 75% majority. They stress that the matter has to be referred to arbitration, and want clarity on whether the dissolution notices were validly issued.

Late Friday, LHAG issued a statement saying Naban, Rosli, Ooi, Ong, and Saravana have ceased to practise as partners of the firm and no longer represent the firm.

It is unclear if they resigned.

A senior lawyer says never before in Malaysian history has there been such an acrimonious dissolution of a law firm. While the lawyers may have reason to fight, he says it appears unprofessional. Moreover, the legal actions could result in employees and clients being caught in the middle.

The Edge was given to understand that some senior lawyers may have stepped in to help resolve the matter, but to no avail. Documents show the tiff has become quite personal in nature.

LHAG’s history can be traced back to 1993 when two partners of Skrine & Co, Datuk Thomas M L Lee and Datuk Seri Hishammuddin Hussein, left Skrine to establish Lee Hishammuddin. In 2005, Lee Hishammuddin merged with Allen & Gledhill to form what is now LHAG.

According to The Malaysian Lawyer website, in 2019, LHAG tied with Skrine as the second largest firm with 126 lawyers.

Both ex-parte applications will be heard by High Court judge Datuk Ahmad Bache in chambers.

 

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