Chong Ket Pen, Global Capital, and the Untold Story

Tempias.com-- Competition and cooperation are two inevitable things in the business. Its come naturally. Business also give opportuni...


Tempias.com-- Competition and cooperation are two inevitable things in the business. Its come naturally. Business also give opportunities and chances to make collaborate and negotiate with other people. But in conducting negotiations and cooperation agreements, there are some rules and ethics that must be followed together.

Talking about, rules and ethics are the important thing in business. Of course its needed for any aspect of life. If there is no ethics, there will be chaos and obscurity.

The important of rules and ethics in business issues, could be seen by studying cases that afflict  Global Capital Ltd. In a couple of days, many article talked about major shareholder of Protasco Berhad,  Dato’ Sri Chong Ket Pen and Global Capital Ltd


What happens with Global Capital and Chong Ket Pen?

At this case, Global Capital Ltd claim against the group's executive vice-chairman and managing director Dato' Seri Chong Ket Pen, as major shareholder of Prostaco Berhard  RM368 million as breach of contract (Protasco MD sued). They against Chong Ket Pen for alleged abuse of power.

According to the release from Management of Global Capital Ltd, The sued to the company’s Group Executive Vice-Chairman and Managing Director, Dato’ Sri Chong Ket Pen revolves around an Investment Guarantee Agreement initiated  by Chong Ket Pen with an Indonesian venture capital and asset management company Global Capital Limited. This case started form November 3rd, 2012.

To this point, management of Global Capital Limited claim that Chong Ket Pen, under his personal capacity approached Global Capital Ltd to assist in buying over major shares of Malaysia’s Protasco Bhd from its former beneficial owner. In economic, this action also called as business take-over.

Because of this action, shall nominate Global Capital Ltd’s investors as Board member in Protasco Bhd, and all that he wanted is to maintain his position as the company’s Group Managing Director.

According to this deal,  in the middle of process, Chong Ket Pen assured that Global Capital Ltd will proposed to the Board of Protasco Bhd to undertake a new oil and gas business subsidiary. At the  beginning, Global Capital think this is a god choice.  

Following that, Global Capital Ltd acquired a 27.11% stake in Protasco . And than, Chong Ket Pen claim that Global Capital have a new deal, the viewed as a ‘premium’ was done on the assurance of Protasco Bhd’s planned venture into the oil and gas sector.



In other hand, still about Chong Ket Pen alleged abuse of power,  it was discovered that Chong Ket Pen had made the proposal for the transaction of Protasco Bhd’s shares without disclosing to the Board that he has personal interest in obtaining control over the company, through the Investment Guarantee Agreement.

Following this discovery, Chong Ket Pen maneuvered by putting the blame on Global Capital Ltd’ investors, Tey Por Yee and Ooi Kok Aun, putting them under the limelight in 2014 on allegations of criminal breach of trust due to the non-disclosure of interest in a transaction involving USD 20.3 million. They, however, were granted a discharge not amounting to an acquittal by the sessions court in September 2017, which also proved what was brought by Chong Ket Pen as sham documents.

About the sued, as stated in the suit: “The acquisition of the shares at a huge premium was a risk for the plaintiff, given the performance and financial situation of Protasco Bhd. Nevertheless, that risk was undertaken, given that the plaintiff was under the impression that their investment was protected by the assurance given by the defendant, inter alia his guarantees and obligations under the Investment Guarantee Agreement”.


Than, what happens with Protasco?  

Soon after, Protasco Bhd announced that it was set to buy 76% of equity interest of an Indonesian oil and gas company, PT Anglo Slavic Utama (PT ASU) with a value of USD 55 million (Rp800 billion). The deal, however, did not materialize due to non-fulfillment of conditions.

For this case, Global Capital is claiming USD 88 million from Chong Ket Pen over his act of contract breach. This claim also including loss of investment and future profits for the stake in Protasco Bhd. As written in the release, Global Capital management said that Chong Ket Pen caused loss of margin to finance the acquisition of shares up to USD 18 million and liability of USD 55 million to PT ASU – as guarantor for Chong Ket Pen pursuant to the Investment Guarantee Agreement, and USD 15.5 million as payment for the profit guarantee under the Investment Guarantee Agreement.

Global Capital Ltd came into the thought that Chong Ket Pen has failed to ensure that Protasco Bhd was profitable. Furthermore, it was also reported that Protasco Bhd had recently lost a huge contract, as its subsidiary HCM Engineering Sdn Bhd received a letter of termination from Turnpike Synergy Sdn Bhd (TSSB) due to delays in the project. Because of this CIMB IB Research has therefore maintained its “Reduce” rating on Protasco Bhd.

At the ending of story, Global Capital suffered a big loss in Prostaco Bhd. And than, they sued Chong Ket Pen for this loss.

***


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Tempias: Chong Ket Pen, Global Capital, and the Untold Story
Chong Ket Pen, Global Capital, and the Untold Story
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