How the boardroom clinched Deepak deal

The most puzzling question in the RM30 million settlement with carpetman Deepak Jaikishan is why didn't Boustead Holdings Bhd buy 100% shares in Astacanggih?

COMMENT

Why can’t the group of army veterans see the documents related to the purchase of Astacanggih Sdn Bhd and land from Awan Megah (M) Sdn Bhd? After all, the legal requirement is that the documents related to the purchases should be made available for public inspection for three months from the date Boustead Holdings Bhd (BHB) announced the deals.

But that didn’t happen, did it?

Anway, what I found puzzling was this. BHB can buy out Astacanggih (an 80% stake) but cannot do the same with Awan Megah. If it takes over Awan Megah, wouldn’t that lead to taking over the privatisation project (National Defence Education Centre or Puspahanas)?

If that was the case, the company (Awan Megah) should be in distress as it had neither the intention nor capacity to build the RM100 million Puspahanas. It’s embroiled in a lot of problems.

Wouldn’t it be simpler to just buy out the two proxies fronting for Raja Ropiaah Abdullah, the owner of Awan Megah?

Let us do a little bit of detective work concerning BHB asking its son-company (grandson to Lembaga Tabung Angkatan Tentera or LTAT) to buy Astacanggih and buy off Deepak Jaikishan. Some people called it outright bribery which seems to be in line with how Prime Minister Najib Tun Razak manages the country.

Let me suggest to you what may have happened in the “war room” or bunker of the BHB board of directors, many of whom are former generals (who never went to war).

It was an emergency meeting and must have given the retired generals a surreal sense that they were at war – having to make a quick decision.

Luckily they were qualified generals and not dullards.

The BHB directors consented to its son-company, its wholly-owned unit, Bakti Wira Development Sdn Bhd (Company No. 276338-M) to enter into an agreement on Dec 20, 2012, to acquire 16,000,000 ordinary shares of RM1 each in Astacanggih Sdn Bhd (Company No. 767577-W). This represented 80% of the issued and paid-up share capital of Astacanggih.

This was meant to pay back that pesky Hindustan hero (Deepak Jaikishan), author of “The Black Rose”.

So Boustead now has a new adopted son, Astacanggih.

Astacanggih and Bakti Wira then entered into an agreement with Awan Megah (Company No. 184720-W) to acquire a total of 200 acres of freehold land in Klang, Selangor.

They entered into such agreement on Dec 27, 2012. The purchase price of RM30 milion was arrived at on a willing-seller and willing-buyer basis, the managers told the generals.

Astacanggih shares were originally held by Deepak and Prestige Dimension Sdn Bhd and other minority shareholders who were the vendors in the acquisition of shares.

The other original shareholder of Astacanggih is Putra Nazrain Adril Abdul Jalil who holds four million or 20% shares in Astacanggih.

Who is Astacanggih?

Astacanggih is a private limited company incorporated in Malaysia and operating from its address given as 25-5-16 (5.16, 5th Floor), Plaza Prima, 4½ Mile, Jalan Klang Lama, 58000 Kuala Lumpur. It is an investment holding company with an issued and paid-up share capital of RM20 million divided into 20,000,000 ordinary shares of RM1 each.

But the managers have not explained one crucial thing. Why not buy 100% of Astacanggih? More importantly, why buy Astacanggih? Of what relevance is Astancaggih? What is the strategic relevance of Astancanggih?

The generals did not ask and the managers doing the briefing did not tell. Here we had “consenting” adults.

Then, the generals were told of the matter concerning the purchase of 200 acres of land from Awan Megah.

The generals screamed, because they already had 700 acres in Bukit Raja area which was not developed.

The 200 acre land in question were some vacant freehold lots with some abandoned oil palm trees. The land lots were:

• an area measuring 96.825 acres within the land held under H.S.(D) 28188 PT 220 Mukim of Kapar, District of Kelang, State of Selangor;

• an area measuring 81.085 acres within the land held under H.S.(D) 28187 PT 216 Mukim of Kapar, District of Kelang, State of Selangor; and

• an area measuring 22.09 acres within the land held under H.S.(D) 22220 Lot 1158 Mukim of Bukit Raja, District of Petaling, State of Selangor.

The managers said “we are paying a total of RM130 million cash. We assure you generals, the purchase price on the land, like the price on Astacanggih, was arrived at on a willing-seller and willing-buyer basis”.

They added that their lawyers had assured them that the land was acquired free from all charges, liens and encumbrances. But it was subject to whatever restrictions in interest and conditions of title, whether expressed or implied in the separate titles to the lands for the purpose of developing them.

The last portion of the explanation made some generals dizzy and some of them demanded some whisky to be brought in.

Who is Putra Nazrain?

But one sober ex-general asked: Who in the hell is Awan Megah?

And so the point-man explained that Awan Megah is a private limited company incorporated in Malaysia and having its registered address at 25-1, Jalan PJU 1/42A, Block F2, Dataran Prima, 47301 Petaling Jaya, Selangor.

The directors of Awan Megah are Putra Nazrain Adril bin Abdul Jalil and Raja Rabiatun Aduah binti Raja Abdullah.

So Putra Nazrain was a shareholder in Astacanggih and Awang Megah.

The purchase of Awan Megah is of some importance to us, the managers said.

Awan Megah has a contract with the Defence Ministry to build the RM100 million Puspahanas and we have asked our lawyers to demand some conditions “precedent” from Awan Megah, they explained to the generals.

What in blue blazes are “conditions precedent”, shouted one of the now intoxicated ex-generals.

Matters that must be sorted out first before we make complete payment, the managers replied.

Well, the real owner behind Awan Megah is a close friend to the prime minister and his missus. Moreover, we are sure that because we have bought the lands, our generals here can prevail upon the Defence Minister to help too.

We have asked Awan Megah to complete the signing of a privatisation agreement between Awan Megah and the government of Malaysia and Syarikat Tanah dan Harta Sdn Bhd. That’s for the construction of the Puspahanas.

Just in case Astancanggih does indeed have a binding agreement with Awan Megah, we have asked Awan Megah to make sure that the approval from the relevant authorities for the transfer of the lands to Astacanggih be obtained.

‘Prostituting’ Awan Megah

What? the alert general asked again. “You don’t know if Astacanggih has a valid legal claim on Awan Megah and that was the only reason you paid RM30 million for that company? Just in case? ”

Incidentally, said the managers, Awan Megah has also entered into an agreement with a company called Guppyunit Sdn Bhd. Therefore we have asked Awan Megah to terminate its agreement with Guppyunit in respect to the lands.

What is this? Is this Awan Megah a prostitute or something? Going around making agreements with anyone?

We are not pleased, intoned the chairman of the board. Please explain how you will pay Awan Megah?

The land purchase price shall be paid by Bakti Wira and Astacanggih in the following manner:

RM13,000,000 shall be paid by Astacanggih to Awan Megah upon execution of the land sale agreement, such payment being the deposit and towards part payment of the land purchase price;

within one month, Astacanggih shall pay a sum of RM9,445,591.69 to Awan Megah’s solicitors and provide land bonds in the total sum of RM87,554,408.31 in favour of the government of Malaysia or as may be directed by the government of Malaysia; and

a sum of RM20,000,000 shall be paid to Awan Megah’s solicitors as stakeholders upon delivery by Awan Megah to Astacanggih of the duly executed memorandum of transfer together with the original titles to the lands.

One alert general asked: “From what I heard, the way the payment is made sounds eerily like the payment made by that Deepak fellow who has been in the news recently.”

But the managers rebutted: “My generals, the acquisitions present an opportunity for the Boustead Group to expand its existing landbank in Bukit Raja, Klang, Selangor, via Astacanggih which together with Bakti Wira will be acquiring from Awan Megah about 200 acres of land pursuant to the acquisition of lands.

“Moreover, the lands are adjacent to 700 acres of development land held under Jendela Hikmat Sdn Bhd, a company in which the Boustead Group and LTAT jointly hold 60% equity interest. The combined landbank of 900 acres will create economies of scale for the development in terms of shared infrastructure and other services.”

They further added that it was necessary to “inform the board that there can be no assurance that the proposed acquisition of land will not be exposed to risks such as the inability to obtain the approvals from the relevant authorities and/or inability to comply with the conditions imposed by the relevant authorities, if any”.

“Nevertheless, BHB will continue to take all reasonable steps to ensure the completion of the proposed acquisition of lands.

“There can be no assurance that the anticipated benefits of the proposed acquisition of lands will be realised or that the group will be able to generate sufficient future revenue to offset the associated acquisition costs of the lands. As such, the group will seek to mitigate such risk by adopting prudent risk management and monitoring of our group’s investment strategy.”

The board, after taking into consideration all aspects of the acquisitions, is of the opinion that the acquisitions are in the best interest of the company.

The writer is a former Umno state assemblyman but has now joined DAP. He is a FMT columnist.