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Friday, March 30, 2012

Penang World City: Why did Guan Eng allow Dijaya to end up with 55%

Penang World City: Why did Guan Eng allow Dijaya to end up with 55%
Vincent Tan & Danny Tan
In my last blog post, I did highlight a surprise in the Bayan Mutiara deal: the ownership structure of the SPV which is controlling the development of Penang World City.
I said:
Finally, it is odd to note that Ivory, the successful bidder, is now left being a minority shareholder in TISB. TISB is a joint-venture company in which Dijaya Corporation Bhd holds a 55% stake, while Ivory Properties Group Bhd the remaining 45%. In the agreement with Dijaya Corporation Bhd, Ivory is the turnkey builder for PWC and will thus be entitled to 48% of the project’s gross revenue with the amount due to the company estimated at RM5billion.
The deal is getting more complicated by the day. From a successful bid and a 70% stake in the joint venture, Ivory is now a minority shareholder of a SPV and a turn key contractor for a backdoor controlling shareholder of PWC which will be built on Bayan Mutiara prime land. Did the state government see this coming or it is a willing player all along?
What is Dijaya Corporation Berhad? The core business of Dijaya Corporation is property development. Over the last 10 years, the company’s assets have tripled from MYR500 million to over MYR1.5 billion, with a sales of over MYR500 million in year 2010. Some of the projects under the company's belt are the Tropicana Golf & Country Resort, Tropicana Indah Resort Homes, Tropicana City, Tropicana Sungai Long, Tropicana Bayou, Tropicana Sungai Buloh (TSB) Commercial Centre, Casa Kiara I & II, Casa Suites, Fortune Park, Arena Mentari, W Hotel & Condominiums, Aston Villa, 10 Island Resort and Tropicana Danga Bay.
More interestingly, Dijaya is controlled by a popular local tycoon Danny Tan Chee Sing. His profile which can be found on Dijaya's website reads:
"Tan Sri Dato’ Tan Chee Sing, a Malaysian aged 56, was appointed to the Board on 5 July 1995. He is currently the Group Chief Executive Officer of Dijaya. He is a businessman and entrepreneur having a wide spectrum of businesses with extensive experience in property development, resort management, restaurants, leisure and entertainment operations through his investments in public and private limited corporations.
Tan Sri Dato’ Tan is also the Executive Vice-Chairman of TT Resources Bhd, Chief Executive Officer of Tropicana Golf & Country Resort Berhad, Deputy Chairman of Berjaya Assets Berhad, and a Director of Berjaya Capital Berhad, Bukit Kiara Resort Berhad, KDE Recreation Berhad, Tioman Island Resort Berhad and Berjaya Golf Resort Berhad. He is also the Chairman of Sports Toto Malaysia Sdn Bhd and a Director of U Mobile Sdn Bhd, a 3G mobile service provider."
I am sure some of the companies which are linked to Danny sound familiar to many e.g. Berjaya Assets Berhad, Berjaya Gold Resort Berhad, Sports Toto Malaysia Sdn Bhd and U Mobile Sdn Bhd. These are the companies controlled by his controversial tycoon brother Vincent Tan Chee Yioun. Both siblings are closely connected and their strong bond can be seen from their intertwined interest in companies held by them.
Vincent Tan was a close crony of Dr Mahathir Mohamad, who is arguably the most controversial ex-premier of the country since he took harsh decisions to invoke ISA detention on various opposition top leaders including Lim Kit Siang, Lim Guan Eng, Karpal Singh, and many more. His sacking and persecution of Anwar Ibrahim in the infamous Sodomy I during the 1997 financial crisis fallout catapulted this notoriety to the climax. Vincent had benefited from Mahathir's largess such as the Sports Toto, Indah Water, a license to operate sports betting through Ascot Sports but permission was later revoked after an uproar by opposition, lawn bowling and indoor netball stadium project, KL Monorail project and the list goes on.
Vincent Tan is no stranger to controversy. I am sure many of you could name some of the alleged controversies which were associated or linked to the famous local tycoon whom Mahathir had named as one of a few billionaires created by his regime. Vincent was alleged to have been involved in the Lingamgate, another infamous lawyer who had tried to fix the appointment of top judges in the country. The case had forced the government to set up a Royal Commission of Inquiry but no one was ever charged or implicated after the outcome of the commission investigation.
Vincent was also allegedly linked to the defection of Dap lawmaker and deputy speaker, Hee Yit Foong, which had resulted in the demise of a 9-month old Pakatan government in Perak.
Vincent had an eye on Penang Hill which he had wanted to convert into a casino. This controversial project did not take off but did contribute partially to the end of the late Dr Lim Chong Eu's political career and rein in Penang.
I am just curious how did Dijaya Corporation Berhad ended up being the controlling/largest shareholder of TISB which controls the development of Penang World City.
CM Lim Guan Eng owes his party and coalition members and leaders an explanation on why this was allowed to happen. Why was Ivory allowed to flip 55% of the land ownership to Dijaya less than 3 months after winning the bid?
I am very disappointed that the state government, via its tender committee, only look at the tender price to select a winning bid. Bidders should have been asked to submit their master plan for the area and consideration should only be done based on their track record. Ivory's biggest commercial project, the Penang Times Square, had to be resuscitated immediately after it was completed due to poor planning and management. Today, the project is showing only moderate sign of success.
The most burning question is did Lim Guan Eng expect and allow the Tan brothers (Danny & Vincent) to gain backdoor control of the PWC?

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