Some Don't Get Away

The court ruling yesterday(7 December 2009)ordering former Malaysia Airlines chairman Tajuddin Ramli to pony up RM589mil he owed to Pengurusan Danaharta Nasional Bhd and two of its subsidiaries is a sad tale of one of the former corporate goliath of Malaysia.

This amount was the balance of a RM1.79bil loan given to him by a group of lenders to finance the much touted single man purchase of a 32% stake in MAS in 1994.Poor Tajuddin has to pay this principal sum of RM589,143,205.57 plus interest at 2% above the Malayan Banking Bhd base lending rate from Jan 1, 2006, until realization.

He also ordered Tajuddin to pay costs amounting to a chicken feed sum of RM350 to the plaintiffs. Tajuddin is appealing.

The payout is one of the largest to be ordered by a court in a suit that has drawn wide attention more for the corporate and political personalities involved rather than the agreements, settlements and unpaid debts.

In his statement of claim, Tajuddin,once a poster boy of many business magazines in Malaysia,had stated that ex Prime Minister Mahathir Mohamad had instructed him to acquire a 32% stake in MAS to bail out Bank Negara which had experienced losses in foreign exchange.[Is this for real?]

Dr Mahathir later told the media he did not remember doing that and it was former Finance Minister Daim Zainuddin who told him that Tajuddin was interested in the shares.[Same tune, same tune]

In 1998 Danaharta acquired Tajuddin’s NPL from the lenders under the Pengurusan Danaharta Nasional Bhd Act, adding that Tajuddin failed to settle his debt to Danaharta from 1998 to 2001.

Tajuddin executed a settlement agreement with Danaharta in Oct 2001, in which he admitted he had been in default of the original loan, and Danaharta agreed to give him a “hair-cut” by discounting the sum if he complied with certain terms.

When Tajuddin defaulted on the payment of the quarterly interest, Danaharta issued a letter of demand, resulting in the tycoon filing for an injunction to restrain them from selling the charged shares.

The High Court dismissed the application and Danaharta terminated the settlement agreement on April 27, 2002, and demanded payment from Tajuddin.

“On April 29, the plaintiffs sold part of the charged shares consisting of Technology Resources Industries (TRI) shares at RM2.75 per share resulting in total share proceeds of RM717,393,875.”

On May 11, 2006, Danaharta sued to recover the balance of RM589,143,205.57 that was still owed on Dec 12, 2005.

As they say, the bigger they are,the harder they fall; irrespective even if they are genuine self made corporate success stories or proxies.

A sad tale of woe, if ever there was one.