ONE of the largest minority shareholders — who holds a direct and indirect 14 per cent stake in Sarawak Cable Berhad or SCB — has alleged that former directors breached their fiduciary duties, transferred shares of a subsidiary company to third parties under questionable circumstances, obstructed restructuring efforts, and misused board authority.
Speaking to The Vibes.com today, the shareholder said: “We believe former board members and third-party entities seem to have orchestrated and supported a conspiracy to defraud the company by engineering the undervalued sale of shares in its subsidiary, Trenergy Infrastructure Sdn Bhd (Trenergy) as well as having a history of wrong doings.”
The shareholder, who agrees with the recent white knight restructuring plan introduced by the court-appointed Interim Judicial Manager for SCB, is seriously considering initiating legal proceedings against individuals alleged to have committed fraudulent acts and criminal breach of trust (CBT) within SCB.
“It’s purely fraudulent management as the top members of the board have allegedly committed fraud and CBT, and have gone against the duties to protect our (shareholder’s) interests,” the shareholder stressed, adding, “We suspect these automatons have contributed to the alleged wrong doings.”
“The fundamental matter here is that a director’s primary responsibility, as outlined under the Companies Act 2016, is to protect the rights and interests of shareholders, and not solely to prioritise the claims of creditors as claimed by SCB’s major shareholder cum Director, Datuk Seri Mahmud Bekir.
“Further, on Friday (May 30), at SCB’s 36th Annual General Meeting, Mahmud Bekir via his nominees voted against the re-appointment of the statutory auditor, Messrs Baker Tilly PLT. This itself is telling.”
Records show that it was the same board which appointed Messrs Baker Tilly PLT some years ago.
“As it’s clearly visible that the Sarawak government has been dynamic and forward thinking in its workings and policies, it’s a shame that the nature of SCB — which is a Sarawak- based company —is being inundated by such wrongful behaviour that has crippled the company which has had a huge and positive potential,” the shareholder added.
The person noted that SCB had since been classified as a Practice Note 17 (PN17) company on 30 September 2022, following a disclaimer of opinion issued by its external auditors, Ernst & Young PLT, on its financial statements for the extended 17-month period ending 31 May 2022.
Since then, the company has been struggling to restructure its finances under the supervision of the courts.
The High Court’s ruling on the sale of SCB’s wholly-owned subsidiary, Leader Cable Industry Bhd (LCIB), is expected to play a decisive role in determining SCB’s financial recovery prospects and future listing status as LCIB is the core asset needed for its regularisation plan. The matter is now being handled by the Interim Judicial Manager in court.
If the Court decides in the Interim Judicial Manager’s favour — in respect of the proposed white knight restructuring offer and plan — then SCB can proceed with its restructuring and complete the same with the support of its creditors and Bursa Malaysia, being a fully listed main board company.
In relation to the proposed white knight, the Interim Judicial Manager reiterated the allegations against the former directors who have been claimed to have breached their fiduciary duties, transferred shares to third parties under questionable circumstances, obstructed restructuring efforts, and misused board authority while concealing key information from creditors and regulators.
According to a claim filed with the High Court, SCB – as the Plaintiff – asserts that a Share Subscription Agreement (SSA) was executed on 7 September 2023, through which the board of SCB disposed of a 49 percent stake in Trenergy for RM1 million.
The agreement also offered a conditional option to purchase the remaining 51 per cent for RM400,000, provided a further RM600,000 in cash advances was made.
While the SSA stipulated that SCB would be entitled to 80 percent of the profits from a major Trenergy project with Tenaga Nasional Berhad (TNB), the Plaintiff claims the main parties in the case failed to meet the terms. Instead, it allegedly relied on a disputed RM13 million claim under the Construction Industry Payment and Adjudication Act 2012 (CIPAA 2012) to avoid repaying intercompany debt.
A subsequent Variation Agreement dated 15 January 2024 purportedly released the parties (Bilun Borneo Sdn Bhd) from its debt obligations, reducing the total consideration to just RM2 million. Then, on 13 September 2024, the board transferred its entire shareholding in Trenergy to third parties free of any payment, which by itself is possibly illegal.
SCB is now seeking the nullification and rescission of both the SSA and the Variation Agreement, the return of the Trenergy shares, general damages, and any other relief the court deems appropriate.
In a separate legal development, SCB’s Interim Judicial Manager applied to the High Court of Malaya on 28 May 2025, requesting guidance on a proposed sale of assets from its wholly owned subsidiary, Leader Cable Industry Berhad (LCIB — which is in liquidation), to MIE Industrial Sdn Bhd.
The application was filed on 28 May 2025, shortly after SCB submitted an appeal to Bursa Malaysia Securities Berhad on 26 May 2025 against a notice of suspension and delisting.
“The application seeks the court’s direction concerning the proposed sale and to determine whether it is in the best interest of all creditors,” the board of directors had stated, with no mention of the rights of its minority shareholders.
The outcome of both High Court applications is expected to significantly influence SCB’s financial recovery and its prospects for remaining a listed entity, while protecting the rights of the minority shareholders.
Based on the application made to the High Court, the minority shareholder is optimistic towards the critical development and ongoing efforts to stabilise the company which is still operating under judicial management following sustained financial strain.
As it stands, SCB, has received a bona fide offer worth RM112 million from a publicly listed main board company to acquire its wholly owned subsidiary, LCIB (in Liquidation), including settlement of debts of the holding company and other subsidiaries. The proposed deal also includes taking on all of LCIB’s and the groups outstanding liabilities.
This offer was confirmed by legal firm Messrs Krish Maniam & Co — who nominated the court appointed Interim Judicial Manager, Lim Sin Han.
Senior Counsel Datuk Seri Krishna Kumar, who is involved with SCB’s restructuring efforts, described the latest offer as both genuine and significantly more favourable to the company’s stakeholders. The offer also provides a direct settlement with the creditor banks and avoids the liquidation of LCIB.
“In this case, there is now an offer for RM112 million for LCIB and the SCB Group from the willing white knight, which also takes on LCIB’s and SCB’s other creditors, but the matter has been delayed, for what I suspect are certain stakeholders having ulterior motives,” Krishna said.
Krishna explains that this new proposal is now the subject of a judicial application filed by SCB’s Interim Judicial Manager, seeking direction from the High Court on whether the sale is in the best interests of all creditors, not to mention the minority shareholders.
If the decision is in favour of SCB, it would effectively resolve the entire issue and complete the restructuring of SCB group, repayments to the banks and creditors and fulfil the regularisation plan as required by Bursa Malaysia. - May 30, 2025
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