Friday, May 23, 2008

First a police report, now a lawsuit..the battle within PTC is heating up

Penang Turf Club committee sued
Soon Li Tsin May 23, 08 4:40pm
The Penang Turf Club (PTC) committee members and several others are being sued by its members over the deal made with developer Abad Naluri Sdn Bhd to develop the controversial Penang Global City Centre (PGCC).
The legal action - commenced by Tan Kok Ping and Lee Choon Hoe in their own capacity and on behalf of all club members - was filed today at the Penang High Court.
The suit named PTC committee members Ong Eng Khuan, Robert Chan Woot Khoon, Dr Henry Ooi Kwee Lim, Oon Chong Kie, John Alexander Rodgers, Seow Chin, Tan Phaik Guan, The Choon Beng, Ch’ng Chin Ghee, club consultant Muhammed Rizal Abdullah, club financial controller Tan Hock Lim and club assistant general manager and secretary Leow Khin Ming as defendants.
The PGCC, located in the heart of the Georgetown, has been billed as the country’s largest private sector development project. It is also the single-biggest component of the Northern Corridor Economic Region development plan, launched last August.
The developer, Abad Naluri, is an associate company of Equine Capital Bhd controlled by businessman Patrick Lim, who is said to be linked to Prime Minister Abdullah Ahmad Badawi. Equine Capital holds 25 percent of Abad Naluri.
Mirroring its Kuala Lumpur counterpart, the PGCC boasts of two five-star hotels, a performing arts centre, retail complex, two office towers, residential properties, a world-class convention centre, an observatory tower, parking spaces, monorail transportation and a public arena.
‘Not consulted’
The crux of the suit revolves around some 580 ordinary members of the well-established horse racing club being kept in the dark over several agreements signed between the PTC and Abad Naluri.
In 2003, PTC and Abad Naluri, signed a preliminary agreement for the sale of some 260 acres of the club’s land for RM488 million in order to develop the PGCC. Abad Naluri was expected to raise that sum and manage the financing for several years before the PGCC project starts contributing back.
From the RM488 million, RM375 million was designated to build a new racecourse in Batu Kawan in the mainland, relocating PTC’s existing racecourse on the island's prime Batu Gantung Road while the remaining RM113 million would be paid to PTC in cash. However, this agreement had allegedly lapse and Abad has paid only RM10 million in advances to PTC so far.
The plaintiffs contend that the defendants failed to impose the condition for Abad Naluri to pay the club 10 percent from the RM488 million purchase price as deposit. Subsequently, a formal agreement was signed on May 12, 2004 which restructured several clauses in the preliminary agreement. The plaintiffs argue that the changes were not approved by PTC members via an EGM.
Similarly, they alleged members were not consulted when the PTC president and two members signed a supplementary agreement on April 1 this year that granted Abad Naluri a renewable extension of three years in fulfilling their contractual terms.
The plaintiffs also contend that the PTC committee’s extension of the 2004 agreement resulted in a loss of revenue to the club after the re-zoning exercise under the Penang Structure Plan which was gazetted on June 28 last year.
The coveted Batu Gantong land valued between RM410 million to RM430 million was enhanced to a value of approximately RM2 billion after being re-zoned as a ‘mixed development’ from ‘open recreational’ area. The ordinary members also alleged that the committee has refused to disclose details of the agreements signed with Abad Naluri despite numerous requests for them.
According to the plaintiffs, all this amounts to breach of fiduciary duties and the committee - as trustees of the club - failed to act in the interests of the club in general.
No approval
Hence, the plaintiffs are seeking the following:
declarations from the committee defendants for acting in breach of their fiduciary duties
declarations from secretariat personnel for breaching of their terms of employment against the club’s constitution for exceeding their authority in executing several agreements
an injunction to restrain the defendants from further acting in breach of the club constitution
an order indemnifying the plaintiffs all tax liabilities imposed pursuant to the supplementary agreement
damages equivalent to the difference between the value of the Batu Gantong land on the date of the club’s extraordinary general meeting on Nov 25, 2002 and the execution date of the supplemental agreement April 1 this year
an order to set up an inquiry to analyse the loss and damage suffered by the plaintiffs due to the failure of the committee defendants to require Abad Naluri to pay a sum equivalent to 10 per cent of the purchase price of the Batu Gantong land as deposit
aggravated and exemplary damages to be assessed alternatively
Kok Ping and 12 other ordinary members of the turf club previously lodged police report on May 8 alleging that the PTC committee had abused its powers in its dealings with Abad Naluri.
Penang Chief Minister Lim Guan Eng has also announced that the PGCC project cannot proceed because it has yet to be approved by local government agencies.
According to Lim, not a single approval letter has been given to the developer by government authorities including the Penang Municipal Council and the Land Office.

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