By Khairie Hisyam
A Singapore court case has raised the issue of bribery by Malaysian-listed Bina Puri Holdings Bhd to third parties in Saudi Arabia in exchange for securing construction contracts worth more than RM200 million. Bina Puri denied the allegations.
The issue came to light after Singapore-based ANC Holdings initiated proceedings, in August 2011, in the Singapore High Court to claim about RM11.5 million in commission after allegedly helping Bina Puri — through its subsidiary Bina Puri Saudi — secure two construction contracts in Saudi Arabia in January 2011.
ANC claimed that it was entitled to its contractual 5% in commission after effectively helping Bina Puri Saudi secure the contracts by alerting Bina Puri to the projects and giving advice on how to price its bids. Bina Puri disputed the claim, saying that they had secured the contracts without ANC’s help.
In the May 2013 judgment, Judicial Commissioner Vinodh Coomaraswamy noted that ANC failed to establish “on the balance of probabilities that it was the effective cause of Bina Puri Saudi’s securing of the Projects”. However, allegations also surfaced during questioning of witnesses that some of ANC’s commission was meant to be bribes with Bina Puri’s knowledge.
In its analysis, the Singapore High Court found that Bina Puri and ANC Holdings entered into the agreement with the common intention that ANC help Bina Puri Saudi procure the projects by paying bribes.
Spotlight on unusual commission percentage
The judge was satisfied that there was indeed a common intention to bribe given that the commission amount in the agreement was more than twice the normal 2% usually expected for such tender projects.
Court analysis noted reference to an “arranged project” in email correspondence from ANC to Bina Puri dated April 15, 2010. An excerpt of the email said that “for tender project, 2% is reasonable but this is an ‘arranged project’ subject to negotiation. Three percent is the minimum requested by the Saudi side”.
Noting that the 5% was 2.5 times the normal commission to be expected, the judge concluded that the reference can only mean ANC “purported to be able to ‘arrange’ for Bina Puri Saudi to secure the Projects otherwise than through the tender process”.
“This serves to reinforce my belief that the common intention from the outset was for (ANC) to use bribery to ensure Bina Puri Saudi secured the projects,” said the judge, who noted that evidence of the parties’ common intention for ANC to pay bribes was given, among others, by Bina Puri’s group executive director Matthew Tee and group chief operating officer Syed Nasser Syed Omar.
“It is a serious thing to admit an intention to secure contracts by paying bribes. It is especially serious — legally and reputationally — for a public listed company to do so,” added the judge.
Notably, during the proceedings neither party denied that there was intention to bribe.
Consequently, the judge dismissed ANC’s claim to commission on the basis of ex turpi causa, non oritur actio doctrine which precludes ANC from enforcing its claim due to illegal elements present in the deal. While Bina Puri never pleaded the ex turpi causa defence, it was still entitled to rely on it, said the judge.
However, the judge did not make any finding as to whether any actual bribery took place.
‘Not an agreement to bribe’
Matthew Tee Kai Woon
However, Bina Puri Group executive director Matthew Tee has denied that Bina Puri entered into the agreement with ANC with the intention to bribe.
According to Tee, it was not a bribery agreement but instead a consultancy agreement for technical expertise and advisory from ANC on how to price Bina Puri’s tender bids and other technical details.
“He came to us and said they can offer technical expertise,” said Tee when contacted by KiniBiz. “However, during the tender stage he went missing and did not help us at all.”
Referring to ANC managing director Chan Lai Thong, Tee explained that ANC was nowhere in sight even after the tenders were closed. As for Bina Puri, they knew where they were standing once all the bids were submitted because the Saudis “are very transparent”, said Tee.
“I was worried because technically he was entitled to consultancy fees even though he didn’t do anything — basically a free-rider,” commented Tee on Bina Puri’s successful bids.
As for the bribery allegations, it surfaced as ANC had to prove that it was the effective cause of Bina Puri’s successful bids for the projects, said Tee. “Because he could not establish what they did for (procuring) the projects, he said they have their ‘intelligence’.”
“If you say ‘intelligence’, then it’s bribery in that sense,” explained Tee. “So we did not condone it — we wanted him to provide consultancy, how to price our tender bids etc — but in the end it had nothing to do with him.”
When asked why there was no denial to the allegations in court, Tee responded that it was the judge’s findings and that Bina Puri is at peace with their intention to take ANC on for technical advisory and not to bribe.
However, Saudi Arabian authorities later cancelled the awards of the projects to Bina Puri Saudi in April 2011. The cancellations came as Bina Puri Saudi failed to provide further letters of credit — amounting to 5% of total contract value of the projects — within the required ten days upon receiving the notices of awards despite extensions of time.
Tee attributed that to regional uncertainty due to the Arab Spring movement in the Arab world at the time.
“Because of the Arab Spring, a lot of bankers were not supportive for the region,” said Tee. “A lot of bankers didn’t want to do anything there.”
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