HRDF sues its former CEO and 3 others to recover RM26.4m

The Human Resources Development Fund (HRDF) has filed a lawsuit against its former CEO and three others over alleged fraud involving RM26.4 million in funds paid for training courses for retrenched workers.

The plaintiff, through law firm Messrs Swan & Partners, filed their writ of summons at the Kuala Lumpur High Court Registry on March 23.

According to the cause papers sighted by Malaysiakini today, HRDF named its former chief executive CM Vignaesvaran (above), 47, as the third defendant.

The other defendants listed are Smart Trends International Sdn Bhd (STI, being the first defendant); STI’s director Emmanuel Benson Abdullah, 46 (second defendant) and former HRDF chief special purpose vehicle officer Muhammad Ghazali Abdul Aziz, 44 (fourth defendant).

According to the statement of claim, HRDF alleged that it was defrauded into paying a total RM26,410,759.22 between June 2016 and March 2018 in the form of financial assistance for 112 grants of the courses claimed to have been conducted by STI purportedly involving over 1,600 retrenched workers.

The plaintiff alleged that all four defendants “had conspired to design a scheme to defraud the plaintiff which is evident from the manner in which they caused the plaintiff to make an aggregate payment to the tune of RM26,410,759.22”.

“Unless there was an agreement to conspire among the defendants, the third (Vignaesvaran) and fourth defendant (Ghazali) could not have approved the first (STI) and second defendant’s (Emmanuel) proposal and claims for payment,” HRDF said.

HRDF further alleged that following an investigation in early 2019, it discovered that STI and/or Emmanuel had made untrue representations related to the training programmes.

The plaintiff claimed that among these untrue representations were that approximately 1,018 trainees were listed by STI as retrenched workers when, in fact, the trainees were allegedly not retrenched workers.

HRDF alleged that other untrue representations include that third parties purported to have conducted the courses on STI’s instructions were not approved by the plaintiff and were not even registered as the plaintiff’s training providers to conduct the training.

“Further or in the alternative, if the said representations were not made fraudulently, the plaintiff pleads that they were made negligently in order to induce the plaintiff to enter into a contract with STI and subsequently caused the plaintiff to make invalid payments totalling RM26,410,759.22,” read HRDF's statement of claim.

The plaintiff claimed that Vignaesvaran and Ghazali had committed breach of contract as its employees when the duo approved the proposals for the training courses without verifying the facts represented in the proposal without conducting proper evaluation, among others.

“By reason of the third (Vignaesvaran) and fourth defendant’s (Ghazali) breach of contract and/or breach of employment, the plaintiff (HRDF) loss RM26,410,759.22 being the aggregate amount paid out to STI for claims made wrongfully and dishonestly,” HRDF said.

The plaintiff claimed that its lawyers had issued a letter of demand dated Dec 23 last year initially demanding a sum of RM27,198,470.59 and another letter dated March 12 this year demanding a revised sum of RM26,410,759.22 from the defendants.

HRDF alleged however that STI and Emmanuel refused and/or failed to make any payment to settle its claim or any lesser sum.

The plaintiff seeks a court order for STI and Emmanuel to pay back the RM26,410,759.22. HRDF also seeks an order that all four defendants pay general damages for conspiracy to defraud it.

The plaintiff among others also seeks exemplary and punitive damages; interest of five percent per annum on monetary claims from the date of judgment until date of full and final settlement; and any further relief deemed fit by the court.

As of press time, Malaysiakini’s attempts to reach out to law firm Messrs Swan & Partners were unsuccessful as were attempts to reach out to law firm Messrs Abd Halim Ushah & Associates which acts for STI and Emmanuel.

According to the online cause list, HRDF’s legal action was set for case management before the Kuala Lumpur High Court Registrar at 9am today.

HRDF has been troubled by allegations of irregularities in the way it was run while under the BN government.

On Jan 9 last year, English daily The Star reported that the government fund lodged a police report over how its former management acquired real estate in Bangsar South, Kuala Lumpur without prior approval from the fund’s board of directors.

On June 22, 2018, following Pakatan Harapan's victory in the 14th general elections a month earlier, Vignaesvaran was reported as having stepped down as HRDF CEO.

Through a statement, HRDF said that then human resources minister M Kulasegaran had directed the fund to establish a Governance Oversight Committee with a mandate to assist the fund's board of directors to fulfil its oversight responsibilities.

It said that the committee would review all aspects of the board’s governance framework to ensure the board functions in an effective and efficient manner to support the operations of the HRDF. - Mkini