Halim Saad sues government over sour Renong deal

“Businessmen familiar with the situation say that Dr Mahathir told Halim that he had been informed by Nor Mohamed that the assets taken over by Khazanah belonged to Umno.” 

Clara Chooi, TMI

KUALA LUMPUR, June 7 — Tycoon Tan Sri Halim Saad has mounted a massive legal challenge against the government to demand full settlement of an over RM2 billion deal that forced him to relinquish his controlling stake in Renong Bhd more than a decade ago.

According to digital business magazine The Edge Review, Halim, once the sole corporate nominee of the ruling Umno, was offered RM1.3 billion in cash and property as well as control of a private waste management company, roughly valued at RM2 billion, in exchange for his disposal of Renong in the 2001 agreement.

But citing people familiar with Halim’s suit, the magazine reported that the business magnate had since only received RM165 million despite giving up his business empire and will be demanding the remainder.

Halim attempted to pressure the government into full settlement, the magazine wrote, but in 2010, former Prime Minister Tun Dr Mahathir Mohamad told him the agreement would not be honoured.

“Halim held numerous meetings with Dr Mahathir — even after the latter quit as premier in November 2003 — and Nor Mohamed to push for a full settlement but he was repeatedly fobbed off,” the article said.

“Some time in April 2010, Halim met with Dr Mahathir to try to seek a resolution to the matter but was told that the government would not be honouring the agreement.

“Businessmen familiar with the situation say that Dr Mahathir told Halim that he had been informed by Nor Mohamed that the assets taken over by Khazanah belonged to Umno,” it added.

The Edge Review said Halim then met with Tan Sri Nor Mohamed Yakcop(picture), then a minister in the Prime Minister’s Department in charge of the Economic Planning Unit, who confirmed Dr Mahathir’s words.

According to the magazine and StarBiz today, Nor Mohamed, the Malaysian government and state-owned strategic investment fund Khazanah Nasional Bhd have been named as defendants in multibillion ringgit suit that was filed in April this year.

In the statement of claim sighted by StarBiz, Halim is alleging that the parties had signed the 2001 and/or another 2003 agreement with him with “an intent to deceive him or induce him to enter into both agreements”.

The Edge Review said the suit, set to be one if the biggest corporate battle in the country, will expose for the first time the “behind-the-scenes dealings in several multibillion dollar transactions and contract awards that shaped corporate Malaysia between the mid-1980s and the early part of this decade”.

“Among other things, the executives say that Halim’s suit will provide insights into how Umno created a political money-making machine around Renong and its associated concern, United Engineers Malaysia Bhd (UEM).

“It will offer Halim’s account of how he ceased to be a business nominee of Umno and also provide a personal confession of the gruelling years the businessman went through as he battled to keep debt-laden Renong afloat,” the magazine wrote.

Halim, who was in 1984 taken in by former Finance Minister Tun Daim Zainuddin to become Umno’s sole corporate nominee, had built Renong and UEM into Malaysia’s largest conglomerate, with ventures in the banking, construction, telecommunications, real-estate development and tolled-roads industries.

The Asian financial crisis of 1997 led to the fall in Renong’s share prices and according to The Edge Review, exposed the conglomerate’s poor cash flow and large debt burdens.

According to StarBiz, a business manoeuvre that year in UEM’s purchase of a 32.5 per cent block of shares in Renong did not go down well with the investing public.

“To appease the market, Halim had, in 1998, offered to buy the Renong shares from UEM by way of a ‘put option’,” the business section of English daily The Starreported today.

“The option price for the ‘put’ was RM3.2 billion, which he was to pay in four instalments three in RM100 million instalments and the balance with interest on February 14, 2001, when the option was due.

“Halim was reported to have paid the first RM100 million but could not pay up the second when it was due, which was when Khazanah took over.

“The sovereign wealth fund took UEM private in 2001 and later cancelled the option,” it reported.

According to The Edge Review, it was Dr Mahathir who stepped up pressure on Halim in 2001, which eventually led to his disposal of control over Renong.

The former prime minister had purportedly instructed Halim to meet with Nor Mohamed, who was then economic adviser, and the latter was to arrange for the government’s purchase of the tycoon’s interest in Renong.

Citing close associates of Halim, Dr Mahathir’s reason was merely that the one-time Umno corporate nominee “no longer enjoyed public confidence”.

The digital magazine said Halim did not agree at first, insisting that Renong did not need a bailout as the group had enough assets to cover its outstanding loans.

“The Mahathir administration saw things differently,” The Edge Review wrote. “The group’s slow progress in restructuring its roughly RM13 billion debt was placing a huge strain on the national banking system.”

Under pressure, Halim subsequently gave up his stake in exchange for the nearly RM2 billion deal and Khazanah subsequently took UEM private in 2001.