H&I Niaga Sues Bank Negara for RM131.9 million

H&I Niaga Sdn Bhd is Class “A” Bumiputera contractor who has been in existence since 1998.  They were recognised as a “Kontraktor Wibawa” by the Guild of Bumiputra Contractors.

H&I has successfully completed more than RM460 million worth of construction projects around the country including a RM164.7 million Engineering Complex project for Institut Teknologi Mara, Shah Alam and a RM56.7 million low-cost housing project for Syarikat Perumahan Negara Bhd.  Other clients include Universiti Malaya, Ministry of Works, Ministry of Youth & Sports as well as Perbadanan Kemajuan Negeri Selangor (PKNS).

The 2 key shareholders of the company are Dato’ Ismail Mohd Hashim (50%) and Ir Amerudin bin Ismail (40%).  They are also respectively the Managing and Executive Directors of the company.

The Project and Dispute with Bank Negara Malaysia (BNM)

 BNM awarded H&I the RM320.3 million contract for the construction of its Financial Services Resource Centre (FSRC) on 14 September 2005. The Project was initially anticipated to take 22 months to complete i.e., it was to be completed by August 2007. However, there were numerous delays to the Project as a result of BNM’s failure to make prompt decisions and instructions on critical matters.

Despite the delays, BNM had successfully held the Islamic Financial Services Board Conference at the FSRC on 23 November 2009.  By then, the project was already 97% completed.

However, since May 2009, H&I was not receiving adequate progress payments from BNM. H&I had two meetings with Tan Sri Zeti Akhtar Aziz (Governor of BNM), Dato’ Zamani Bin Abd Ghani (then Deputy Governor of BNM) and Dato’ Mohd Nor Bin Mashor (then Assistant Governor of BNM) on 16 May 2009 and 8 April 2010, respectively. On both these occasions, Tan Sri Zeti has explicitly expressed that she would do her level best to ensure H&I received their payments and claims for delays in the project.

Instead on 27 April 2010, BNM terminated the Contract with H&I. BNM then decided to appoint Putra Perdana Construction Sdn Bhd as management Contractor to complete the remaining works on the Project at the cost of RM71,999,735.46, who in turn engaged the same subcontractor appointed by H&I meant to complete the balance 3% works.

H&I has exhausted all means to settle the above matter with BNM in an amicable manner.  This includes initiating an Arbitration process between the disputing parties in September 2011. However the lack of cooperation and urgency on the part of BNM to resolve the matter has left H&I with no choice but to institute legal action against BNM.

This is because H&I creditors have made claims and filed suits against the company for outstanding amounts of approximately RM60 million.  This includes an attempt to wind up H&I by Affin Bank for an outstanding amount of RM12 million.

The dispute has caused a complete collapse of H&I which was a highly successful bumiputera construction company with more than 60 staff to only 3 today.

The Suit

The legal suit is filed against BNM, Tan Sri Dato’ Ungku Dr Zeti Akhtar Abdul Aziz, Dato’ Zamani Abd Ghani and Dato’ Mohd Nor Manshor.

H&I seeks to claim the amounts of RM81.9 million for outstanding payments, including costs for project delays and out-of-pocket-expenses; and RM50 million for financial and reputational damages to H&I.

The suit also seeks a Court Declaration that the defendants have made fraudulent representations to H&I and request the Court to make a ruling on aggravated damages as a result of such representation.

Conclusion

I see from the above case that H&I and its shareholder-directors have been maliciously penalized by BNM due to faults of BNM.

BNM has not only caused losses to an honest company, but single-handedly destroyed everything that these 2 men have built over the past 24 years.  Dato’ Ismail and Ir Amerudin have bent over backwards and taken all necessary steps to ensure that the FSRC gets completed despite the tens of millions of ringgit of additional financial cost they had to bear to cope with the delays in the project caused by BNM management.

They even took pains to try to negotiate an amicable settlement with BNM for more than a year, firmly believing that such a key government institution and its top-ranking officials would never leave them high and dry.  However, their trust was betrayed and their faith completely misplaced.

The Government talks about protecting, supporting and promoting bumiputera entrepreneurs in its affirmative action programmes.  And yet, what we are witnessing here is the complete opposite, the victimization and destruction of an honest and competent 100% bumiputera  Class ‘A’ contractor.

We call upon BNM not to act as a big bully in its relations with its contractors and negotiate a fair settlement for the outstanding sums due to H&I.