By Khairie Hisyam
Conglomerate Sime Darby Bhd has reached a consent judgment in its lawsuit, dating back to end-2010, involving former chief executive officer Zubir Murshid and other former senior executives.
Ahmad Zubir Murshid
In a statement last Friday, Sime Darby said that the consent judgment were reached with the five defendants in two civil suits, which it initiated in December 2010 following a loss of RM2 billion for its oil and gas (O&G) and engineering units that financial year.
Apart from Zubir, the four defendants are Mohamad Shukri Baharom, former executive vice-president of the group’s Energy & Utilities (E&U) division; Abdul Rahim Ismail, former chief financial officer of the group’s E&U division; Abdul Kadir Alias, former head of the O&G business unit of the E&U division; and Mohd Zaki bin Othman, former senior general manager of Sime Darby Engneering Sdn Bhd.
All five are defendants in the first civil suit pertaining to the group’s losses from its O&G venture in Qatar (O&G suit) while only Zubir, Mohamad Shukri and Abdul Rahim are defendants for the second civil suit on Sime Darby’s losses in its Bakum dam venture (Bakun suit).
For the O&G suit, Sime Darby and the defendants had agreed to judgment in respect of certain relief stated in the statement of claim which relate to losses incurred in the Qatar Petroleum Project, the Maersk Oil Qatar Project and the Marine project.
Both also agreed for the Court to assess damages for the claims, except for matters relating to Incobliss Consulting Sdn Bhd, and for Sime Darby to enforce the judgement against the Defendants only after recovering all claims from the Qatar Petroleum Project, the Maersk Oil Qatar Project and the sale proceeds of a derrick lay barge, or after three years from the final judgment date for the assessed amount, whichever is earlier.
In respect of the Bakun suit, Sime Darby and the defendants to judgment in respect of certain relief stated in the statement of Claim; for the Court to assess damages for the claims and for Sime Darby to enforce the judgment against the Defendants only after The Malaysia-China Hydro Joint Venture has received all that is due and payable as full settlement from Sarawak Hidro Sdn Bhd and/or the Ministry of Finance and/or any assignee or successor in title thereof, or after three years from the final judgment date for the assessed amount, whichever is earlier.
KiniBiz had contacted Sime Darby for further clarifications on the consent judgment’s implications and is awaiting the group’s answer.
While the statement did not offer further details, in the lawsuit filed in 2010 Sime Darby claimed RM338 million in total as “restitution for monies wrongfully paid out, damages for losses suffered, loss of profit, aggravated damages and costs”, alleging that the five defendants had committed breach of duties leading to the losses.
In its statement of claim, Sime Darby alleged that the five defendants were responsible for the E&U division’s actions and omissions as the decision-making unit in the division. Allowing Sime Darby Engineering to pursue projects in which it had no prior experience is grossly negligent on the defendants’ part, alleged Sime Darby.
The group further alleged that all five defendants awarded jobs to similarly inexperienced subcontractors and failed to pursue claims for work not done.
Closure in sight for O&G episode?
The consent judgment signal a potential end to a four-year litigation process since Sime Darby initiated the two civil suits following a controversial RM2 billion loss of its O&G and engineering units in the 2010 financial year ended June 2010.
During that financial year, the collective losses by both units played a big role in dragging down group pre-tax profits by some 43% from the previous financial year. For FY10 Sime Darby posted RM1.7 billion in pre-tax profits.
In comparison, the group’s E&U division posted RM1.75 billion in pre-tax losses as a result of its O&G and engineering units’ losses. Had the group not seen these losses, Sime Darby would have posted RM3.4 billion in pre-tax earnings for FY10.
Mohd Bakke Salleh
Notably Zubir was asked to leave his position as CEO in May 2010 and Mohd Bakke Salleh, current president and group chief executive officer, took over. Zubir’s contract would have ended in November that year.
“We have identified the problems in the Oil & Gas business and are addressing them to turn around the business. Furthermore, we are collaborating with strategic partners to strengthen our capabilities,” said then-newly appointed Mohd Bakke.
Two months after leaving Sime Darby, Zubir was arrested in July 2010 on criminal breach of trust (CBT) charges involving Sime Darby’s acquisition of Native Customary Rights land in Sarawak, which was worth some RM80 million.
That case is still in court at press time.
Following the RM2 billion in losses, the E&U division was segregated into China and non-China operations with two different executive vice presidents to oversee each sub-division, which is the current structure today.
Sime Darby had also subsequently exited the O&G industry a year after, closing that door with the sale of its oil and gas assets in Teluk Ramunia fabrication yard to Petronas for RM296 million and the Pasir Gudang fabrication yard to Malaysia Marine and Heavy Engineering for RM399 million.
KiniBiz had previously looked at the O&G episode here as part of an eight-part series here.
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