EcoWorld — new name with baggage from the past

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Privately held developer EcoWorld Development Sdn Bhd is generating lots of interest with its aggressive forays, and the likelihood of it being the new vehicle of entrepreneur Liew Kee Sin. Other than the looming possibilities, the company has also been in the limelight due to the history behind some of its landbank. 

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Privately held property developer EcoWorld Development Sdn Bhd is the talk of the town at the moment with its aggressive forays — the acquisition of assets and the proposed buying of 65% of Focal Aims Holdings Bhd for RM230.7 million or RM1.40 per share — and the high possibility of the company being the vehicle of respected property developer Liew Kee Sin in the near future.

The price tag of Focal Aims and the parcels of land in Johor and the Klang Valley amounts to more than RM765 million, which very few companies can muster.

“It’s a lot of money, many listed companies even cannot fork out such large amounts,” an analyst who covers property stocks said.

Its spirit and aggression aside, tongues actually started wagging when the company acquired a 613.79-acre tract of land in Johor for RM 534.7 million in April this year. Not only because the seller was Syed Mokhtar Albukhary’s DRB Hicom Bhd, but also because the land that was sold has an interesting past.

The parcel EcoWorld bought from DRB Hicom is known as the Stamford Holdings Sdn Bhd land, and the court case involving it is known as the Stamford Land case.

The Stamford land saga

It was back in the mid-1980s when a proposal was put in to develop the Stamford Holdings land into a light industrial area, with approvals from the Johor state authorities pending.

Stamford Holdings was then 90% controlled by three families — the Singaporean Seet family and the Wang and Gan clans of Malaysia.

Then in 1988 — two years after current deputy Prime Minister Muhyiddin Yassin was appointed Menteri Besar of Johor — the ball started rolling.

Stamford Holdings officials met two businessmen supposedly close to Muhyiddin, namely Syed Mokhtar and Yahya Talib, who were looking to develop 1,766 acres of land (part of the Stamford Land) and looking to set up a joint venture (JV) company for that purpose.

Under this JV, Stamford Holdings held 70% of the equity with the remainder held by Syed Mokhtar. Reports have it that Syed Mokhtar invested RM1.8 million into the JV.

News reports from that time quoting court documents state that a fresh application was “speedily” approved by the state.

Stamford Holdings also alleges that Syed Mokhtar “made a clean profit of RM83.2 million” when the initial 1,766 acres were sold in 1994.

However, in 1992 Syed Mokhtar is understood to have approached Stamford Land’s directors to develop the remaining 6,500-odd acres of the remaining land in Johor. The sticking point was that Syed Mokhtar and his group sought to have 70% of the new JV and land acquisition at only RM30,000 per acre, which Stamford Land alleged was less than half the going price of the land.

Understandably Stamford Holdings officials resisted.

According to local news reports from the time, one of Muhyiddin’s associates allegedly warned Stamford Holdings that the compulsory land-acquisition papers were on the then-Menteri Besar’s desk and could be “signed at any time”.

According to reports by foreign publications Muhyiddin himself allegedly threatened Stamford Holdings in December of 1992 by telling one of its directors that “time is getting short.”

Later, in July 1994, the state government did acquire the land, though on behalf of the Johor Islamic Economic Development Corp.

Stamford Holdings claimed the three — Muhyiddin, Syed Mokhtar and Yahya — had abused provisions of the Land Acquisition Act 1960 to acquire its 6,500-odd acres of land through the Johor State Islamic Economic Development Corporation.

In addition, Stamford Holdings sought the court to declare that the Johor State Islamic Economic Development Corporation was not entitled to invoke provisions of the Land Acquisition Act to acquire a private landed property.

The Johor state government was also named as a defendant in the suit by Stamford Holdings, who alleged that Muhyiddin and the two businessmen, Syed Mokhtar and Yahya, conspired to use the state government’s authority to acquire the land.

However, the case was concluded in an out-of-court settlement in October 1999 by way of a RM405-million payment for the 6,500-odd acres, which works out to about RM62,000 per acre. Of the sum, the Johor government paid RM313.25 million while Syed Mokhtar’s Kelana Ventures Sdn Bhd paid RM92.12 million.

Yet this was not the only issue involving this interesting piece of land.

Feud with KSL Holdings

A few years down the road, by some twist, state-controlled asset management company Danaharta Nasional Bhd took over a 1,516-acre land parcel that was part of the initial Stamford land and put a tender to sell the land.

Land sources say the land could have been the tract held by Kelana Ventures, but they were unsure how Danaharta came to control the land, or if Kelana Ventures faced any financial difficulties.

Nevertheless, when Danaharta sought to sell the land, KSL Realty Sdn Bhd, a wholly owned unit of publicly traded developer KSL Holdings Bhd, won the bidding at RM264.1 million and paid the 10% deposit.

However, Danaharta terminated the sale and purchase agreement on Nov 17, 2005 because the Estate Land Board’s approvals had not been obtained for KSL to buy the land as required by the sale and purchase agreement conditions.

The 10% deposit was thus refunded to KSL, but a four-year court battle ensued which the Johor-based KSL lost in end-2009. Ruling against KSL, the Federal Court dismissed KSL’s application to review a decision by a different panel on the Federal Court that disallowed KSL from appealing the Court of Appeal’s decision in the matter.

On Jun 5, 2008, the Court of Appeal overturned a High Court decision which was in favour of KSL and against Danaharta.

The dispute centred on whether Danaharta’s termination of the sale and purchase agreement on grounds that the state did not give the requisite approvals was lawful.

KSL had alleged collusion, mala fide and/or deliberate failure to act on the part of Danaharta resulting in the failure of the transaction being completed and had sought an order for specific performance of the sale and purchase agreement.

Officials from KSL had said that parties linked to Syed Mokhtar, through a company called Asas Warisan Sdn Bhd, had tried to purchase the lands from KSL on a sub-sale basis but KSL had rejected the offer.

KSL officials also claimed that Asas Warisan had written to the then-premier Abdullah Ahmad Badawi and then-Johor Menteri Besar Abdul Ghani Othman asking them to intervene in the matter.

KSL’s solicitors had alleged that there were many discrepancies in the whole deal.

Then in December 2008 Syed Mokhtar’s DRB Hicom acquired the same parcel of land from two entities, Benua Kurnia Sdn Bhd and Neraca Prisma Sdn Bhd, for RM722.5 million from individuals Ahmad Abdullah and Mohd Nazree Abu Kassim.

The RM722.5 million consideration was in five plantation assets, namely Connemara Estate, Serendah Estate, Bukit Keledek Estate, Ladang Gadek and Ladang Kupang measuring approximately 6,882.30 acres and valued at RM341.742 million, the issuance of a bank guarantee facility of RM238.95 million and RM141.771 million cash.

And now 613.79 acres of this land was purchased by EcoWorld’s for RM 534.7 million in April this year and forms a chunk of the company’s land bank.

Syed Mokhtar partnering EcoWorld?

Several developers KiniBiz spoke to said that this was a hot topic in developer circles —many say that Syed Mokhtar was indeed in bed with EcoWorld.

A former official from the Johor state Government however denied such notions, stating that Syed Mokhtar was not exactly in the good books of the current Sultan of Johor, Sultan Ibrahim Sultan Iskandar.

While it is common knowledge that the Sultan and Syed Mokhtar are not exactly on the best of terms, details as to why there is tension are unknown.

“I don’t think EcoWorld will take such a big risk…the Sultan is still a very important figure in Johore,” said the former official.

Those who say that Syed is indeed part of EcoWorld highlight that SP Setia under Liew have worked together with Syed Mokhtar on many occasions.

It seems much of SP Setia’s Johor landbank was acquired from Syed Mokhtar.

A check on the Bursa Malaysia reveals that in August 1999, SP Setia had acquired 888.47 acres in Johor from none other than Kelana Ventures for RM111.06 million.

SP Setia is also partnering Syed Mokhtar’s Tradewinds on a 50:50 basis to develop affordable housing under the PRIMA scheme at Taman Ikan Emas, Cheras.

There is also the Federal Hill land in Bangsar, where SP Setia is partnering Mekar Gemilang Sdn Bhd in Sentoa Jitra Sdn Bhd to develop super-prime land with a gross development value ranging from RM6 billion to RM11 billion. Mekar Gemilang is a Syed Mokhtar company.

“Basically Syed Mokhtar has a lot of land bank, but does not have a really good developer…this (partnership with SP Setia) solves his problem,” a source said.

KiniBiz was not immediately able to contact Syed Mokhtar’s associates.

“These days they say every deal around is said to be linked to Syed Mokhtar,” one of the businessman’s aides had said earlier this year when contacted on similar rumours.

With such a partnership history, the fact that EcoWorld’s senior management is full of former SP Setia top brass brings heavy implications, especially since Liew’s eldest son, at the tender age of 22, is also on the board of EcoWorld.

Tomorrow: PNB’s predicament and SP Setia without Liew