RM15.5m spent on seizure, maintenance of Equanimity

This article first appeared in The Edge Financial Daily, on May 7, 2019.
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KUALA LUMPUR: Attorney-General Tommy Thomas said the government has spent an estimated RM15.5 million in seizing the superyacht Equanimity and maintaining it for nine months until it was sold.

In a statement, he said the amount spent, equivalent to US$3.75 million, is a “petty sum” for services rendered over nine months.

“If the arrest had been undertaken anywhere else in the world, the cost would have been two to three times more. Further, no commission is also payable to the broker because it is a directly negotiated sale,” he said.

“What this sale demonstrates is the capacity of our legal system to perform world-class services in a specialist branch, admiralty law, and for ancillary supporting services to keep the superyacht in a good and safe condition for nine months.

“It is also fitting that a Malaysian purchaser became the proud owner of the superyacht,” he added.

Thomas said the court-appointed stakeholder had received the payment of US$126 million on April 23.

Meanwhile, the bill of sale was executed by the sheriff of the Admiralty Court the next day, and physical possession of the vessel was delivered to a Genting Malaysia Bhd subsidiary on April 25.

 

The breakdown of how the RM15.5 million was spent since the ship was seized on Aug 6 last year is as follows:

i) About RM407,000 was spent on berthing charges between August and November 2018 when it was docked at the Boustead Cruise Centre in Port Klang before it was moved to the naval base in Langkawi

ii) Almost RM12.7 million spent on operational costs of the yacht while it was under arrest for nine months. These include:

• Agency fees for local agents

• Management fees for the professional yacht management company

• Salaries and transport for the professional crew

• Protection and indemnity insurance

• Hull and machinery insurance

• Food and various supplies

• Equipment and services rendered for necessary repair and maintenance works

iii) About RM400,000 was spent on engaging a reputable valuer and appraiser “of international standing” to appraise the value of the yacht and equipment belonging to the vessel

iv) Around RM1.6 million was spent on legal fees for Joseph & Partners as solicitors on record representing the Malaysian government and 1Malaysia Development Bhd (1MDB) group of companies

v) RM360,000 in counsel fee for Ong Chee Kwan

vi) RM40,000 in obtaining foreign legal advice from Holman Fenwick Willan on the process of deregistering and re-registering a vessel in red ensign choice jurisdictions. Thomas said the foreign legal advice was included as part of the information pack distributed to potential buyers during the judicial sale period.

 

Thomas expressed gratitude to the Royal Malaysian Navy for allowing the Equanimity to dock at its naval base for free from November last year until its delivery on April 25 this year, and lead counsel Sitpah Selvaratnam for undertaking the case on a pro bono basis.

He said there were multiple levels of screening and approvals for the payment of the cost incurred in maintaining and preserving the vessel, namely by the legal and PricewaterhouseCoopers teams at the first level.

“Once approved, invoices were submitted to my office for second screening, and thereafter by the sheriff of the Admiralty Court. It was only after the invoices were cleared by the three levels were they submitted to the board of directors of 1MDB for payment approval.

“For legal fees, all invoices were accompanied by detailed time sheets, particularising the tasks undertaken for each hour charged in the invoices and supporting documents for disbursement incurred. The time sheets were scrutinised by this chamber.

“The sum of RM15.5 million is not the final figure. However, we are confident that the remaining expenses would be much less,” he said.

Thomas said the purchase price will be kept by the court-appointed stakeholder until the expiry of a 90-day period, when the legal team will move the court for leave to gazette the receipt of payment, for taxation of costs, and determination of priorities for payment out of the proceeds.

“It is only after these orders of court that the monies will be credited into a segregated 1MDB asset recovery account, that was set up solely to recover 1MDB assets to pay off 1MDB debt,” he explained.

It was earlier reported by various news portals that the Equanimity had been renamed Tranquility, according to ship-tracker site Marine Traffic.