H&I Niaga Wound Up; 123 Sub-Contractors in Jeopardy

H&I Niaga Sdn Bhd has been wound up by Affin Bank, RM23.1 million payable to 123 subcontractors and suppliers in jeopardy

Yesterday the KL High Court Judge Tuan Mohammad Ariff Bin Md. Yusoff has granted an Affin Bank application to wind up H&I Niaga Sdn Bhd due to an outstanding amount of RM12.8 million.  Datuk Ng Seing Liong from Messrs S L Ng Corporate Solutions Sdn Bhd has been appointed as the liquidator.

As far as the RM131.9 million suit against BNM is concerned, the matter will now be stayed. It will now be up to him to decide as to whether to continue with the RM131.9 million suit against Bank Negara Malaysia (BNM).

BNM had issued a statement yesterday to state that H&I Niaga had asked for arbitration into the dispute but pulled out at the last minute. "H&I Niaga had initially referred the contractual dispute for arbitration but, on the first day of the hearing, H&I Niaga withdrew from the arbitration process."

The above statement is mischievous because BNM had refused to cooperate in the arbitration process and had sought to delay it as long as it could in order to leave H&I with no more time to settle before it got wound up.

The notice of arbitration had been sent to BNM since 13 September 2011 but the first preliminary meeting for arbitration was only held on 13 January 2012.  In addition, only as late as 28 March, BNM lawyers had requested for “security for costs”, which given H&I’s inability to pay, would have derailed the entire arbitration process.

And on 5 April, BNM attempted again to derail the arbitration process by putting into it into abeyance via a wrongfully obtained winding up order against H&I.  The lawyers for H&I managed to throw out the winding up order, but that had delayed the process further.

By 14 June, it was clear to H&I that BNM has no intent of seeing through the arbitration process and was using every trick in the book to delay the process while at the same time conspiring with other parties to have H&I wound up.

In fact, if BNM is even sincere about a settlement with H&I, the latter would not even have to go through the time-consuming and costing arbitration exercise.  The fact that between the H&I termination in 27 April 2010 and the decision to go through arbitration in September 2011, the company had tried its best via all means to come to a settlement with BNM but it was of no avail because BNM was not even interested to pay a single sen to H&I.

What is most telling is BNM’s own admission in its press statement the termination of Bumiputera contractor H&I Niaga Sdn Bhd was in the “final stages of construction for the Malaysia Financial Services Resource Centre (FSRC)”.  The termination at such a late stage of the project defies logic and only indicates malice in the process.

As a result of BNM’s actions, H&I will not be the only victim as its subcontractors, whether in the FSRC project or in other projects will not get paid the proper dues.

For example, H&I still has retention sums for completed projects – Information technology and communications laboratory for Universiti Islam Antarabangsa Malaysia (UIAM), Upgrading of Institut Kemahiran Tinggi Belia Negara and Dental Faculty of UiTM Sungai Buloh Campus amounting to RM1.8 million, RM2.0 million and RM5.6 million respectively - which are payable to some of their subcontractors.  Hence even though these subcontractors had nothing to do with the BNM project, their monies will be similarly withheld due to H&I being would up.

In total, H&I still has an outstanding amount of RM23.1 million still payable to its subcontractors and suppliers, which is not in doubt.

The above case demonstrates that the words of the senior management cannot be trusted when conducting normal business dealings with BNM.  Before termination, 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.  This is a matter which had not been denied by BNM in its statement.

This act of injustice against H&I and its 123 sub-contractors has seriously jeopardized the good name of BNM.  What we are witnessing here is the complete opposite, the victimization and destruction of an honest and competent 100% bumiputera Class ‘A’ contractor.

If BNM has any sincerity at all in resolving the above dispute, then surely it will attempt to offer a settlement with H&I even as of now, despite the latter having been wound up.  If not then BNM will just be perceived as an unethical institution which has sought to absolve its own mistakes with the misfortunes of its contractors and sub-contractors.