RM180m suit filed against 25 entities including Barry Goh for fraud over Kedah and Kelantan solar projects

RM180m suit filed against 25 entities including Barry Goh for fraud over Kedah and Kelantan solar projects
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KUALA LUMPUR (July 4): A Japanese national and his Singapore-based company DPI Solar 1 Pte Ltd has filed a suit against BGMC International Ltd (BGMCIL) group founder Tan Sri Barry Goh Ming Choon, his nephew and BGMCIL CEO/Executive Director Datuk Michael Teh Kok Lee, BGMC Holdings Ltd, BGMCIL and 21 others for purported fraud and causing wrongful loss over the Kuala Muda, Kedah and Machang, Kelantan solar projects.

The plantiff has claimed that Goh is a shadow director in the BGMC group of companies, while Teh is his nominee in the business and said to control the business affairs of BGMC and some of the other companies which are named in the suit that owns land for the project. BGMC, according to the statement of claim, is an acronym for Barry Goh Ming Choon.

The RM180 million suit was filed by Kazuomi Kaneto and DPI Solar at the High Court here on Monday (July 4) via the firm Messrs Wong and Partners, and it also named Pimpinan Ehsan Bhd (PEB), a company listed on the Malaysian stock exchange, ReNikola Sdn Bhd, ReNikola Holdings Sdn Bhd, and one Lim Beng Guan as co-defendants.

BGMCIL is a Cayman Islands company which is listed at the Hong Kong stock exchange, and the large scale solar photovoltaic plants were developed by two entities known as BGMC Bras Power Sdn Bhd and Idiwan Solar Sdn Bhd.

Kaneto and DPI Solar in their statement of claim alleged they were engaged by Goh and Teh to participate in a joint venture (JV) to bid with the Energy Commission for the two renewable energy projects in Kuala Muda and Machang in 2017, for which they claimed the Malaysians do not have the expertise.

The JV resulted in them winning the bid, with the project costing almost RM414 million. As a result, it was agreed that Kaneto and DPI Solar would have a 40% interest while Goh, Teh and the BGMC group would hold 60%.

They also formed land companies, namely Kuala Muda Estate Sdn Bhd and Machang Estate Sdn Bhd, and also bought an additional land bank and named it Machang Estate II Sdn Bhd for possible expansion, for the purpose of the project.

The Japanese national and the Singapore-based company also claimed that following purported financial difficulties faced by Goh and Teh, he and the company had put in funds and increased their stake in the venture.

Kaneto and DPI Solar claimed to have suffered losses arising from the conduct of the defendants where they alleged there was fraud, misrepresentation, breaches of fiduciary duty, inducement of breach, conspiracy and unlawful interference with trade in dealing with a third company ReNikola.

Hence with the suit, the Japanese and his Singapore-based company is seeking an injunction to restrain the defendants from proceeding with the sale of BGMC Bras Power and Idiwan Solar — the two developers of the Kuala Muda and Machang solar photovoltaic plants respectively — as well as the ownership of the land held by Kuala Muda Estate, Machang Estate and Machang Estate II or any assets or interests to ReNikola or any other entity.

Besides this, they are seeking damages of close to RM180 million (ie RM174,689,566.73 and US$1.246 million) and other reliefs deemed fit by the court.

Details of the suit

Kaneto and DPI Solar in their statement of claim sighted by theedgemarkets.com alleged that they were participants of the JV and had invested huge sums of money and also allegedly helped Goh and Teh to come up with more funds following their financial constraints with regard to the venture.

This is despite the initial 40:60 interests between Kaneto and DPI Solar with Goh and Teh.

It was represented to the plaintiffs that a company known as Sparks Energy 1 Sdn Bhd would in time emerge as the majority shareholder of the two companies which hold the concession rights of the two solar projects.

The plaintiffs had reposed absolute trust and confidence in the BGMC group of companies and its controllers, namely Teh and Goh, for the purposes of the JV.

However, Kaneto and DPI Solar claimed that instead of Goh and Teh and the other defendants protecting their interests in respect of the investments and also objections, the plaintiffs alleged Teh and Goh acted in concert and conspired with their nominees and agents in a scheme to transfer ownership and control of the project companies and the land companies to ReNikola or its affiliates.

They further claimed that on June 8, PEB announced a proposed regularisation plan through Bursa Malaysia, involving its acquisition of economic interests in the project companies through the acquisition of ReNikola Holdings.

Kaneto and DPI Solar further alleged the breaches complained of against Goh and Teh were induced by the proposed acquisition put in place by ReNikola, ReNikola Holdings, PEB and Lim.

They objected to any such disposal or sale of the solar projects as it is contrary to the intention of the JV and commercial considerations that they had agreed to.

Such fear was realised, they said, adding that on the date of the filing of this suit, BGMCIL also issued an announcement to the Hong Kong stock exchange on the disposal of the said solar projects.

Surin Murugiah