Kamdar: "It's a messy family affair" (5)

I wrote before about this rather strange case.

A new judgment can be found here.

Some snippets (emphasis mine):


[48] The evidential record further disclosed that some years later vide letters dated 20 February 2014 and 7 April 2014 addressed to Bursa Malaysia Berhad, Yap Kim Hong disclosed that he had acted as a nominee in the acquisition of the 4,801,920 undersubscribed shares at RM1.20 per share. The cost amounted to RM5,762,304-00, which monies emanated from the plaintiff’s account. Yap Kim Hong further claimed that he was approached by Bipinchandra to utilise his name.

[49] He added in his second letter that the monies from dividends for 2006 and 2007 were transferred to Bipinchandra. The shares were later sold at a price of RM2,800,000-00 and Yap Kim Hong maintained that he was told to transfer the KGMB shares to another broker. The sale proceeds were to be given to Bipinchandra. On the latter’s instructions however, Yap Kim Hong passed the sale proceeds in cash to Jayesh. There is a picture to support this statement, showing the boot of a car with large quantities of cash contained in a luggage bag.

[50] Bipinchandra denies that Yap Kim Hong was his nominee. He further denied giving instructions to Yap Kim Hong relating to the proceeds of sale of the KGMB shares.

[53] The second cheque was issued as a ‘cash’ cheque with the “A/C Payee Only” crossing cancelled off by the cheque signatory, namely Bipinchandra.

[54] The reverse side of the cheque contained two signatures, identified to be that of Bipinchandra and Jayesh. There was also a handwritten confirmation stipulating that PW-1 of the plaintiff had been contacted with regards to the encashment.

[55] Jayesh maintains that he was called to the bank purely to sign on the reverse side of the cheque, and that he did not take the cash of proceeds of RM2,420,000-00. He maintains that it was Bipinchandra who received these proceeds.

[56] Bipinchandra stated that he did not take the proceeds of the cash cheque, but that Jayesh did so. He maintained that he acted on the instructions of HM Kamdar in relation to this cheque.

[57] It is contended for the plaintiff that either Bipinchandra or Jayesh took the cash proceeds of this cheque. The learned trial judge did not make any finding on this issue. It was simply not addressed. The reason appears to be that this transaction was characterized as a loan for HM Kamdar.

[59] Jayesh testified that pursuant to a family meeting he had advised members of his family who were also shareholders in KGMB that he needed monies for the listing exercise in order to ensure that the price of KGMB shares on listing would be above RM1-00 per share. He further claimed that this sum was utilized for listing expenses.

[62] It is pertinent that in the course of presenting the costs of the listing exercise to the board of directors of KGMB, which amounted to RM2.23 million, this sum of RM580,000-00 did not feature as a part of the expenses. However Jayesh maintained in his testimony that this was because it was a ‘family matter’, whereby he had promised the shareholders a price above RM1-20.

[72] In this context, it is relevant that there were no payment vouchers or any supporting documents available to support the debit entry in the general ledger. This runs awry of the normal accounting practice in the plaintiff which requires a payment voucher and other supporting documents such as an invoice stipulating the purpose of the payment etc. This comprised a part of PW-1 testimony.

[73] There is no record of the alleged verbal instructions of HM Kamdar in relation to the utilization of these monies. Neither is there any board approval for this use of the sum of RM8,842,306-00.

[87] The importance of this letter is that one of the defendants here expressly admits that although these withdrawals were described as a loan to HM Kamdar, none of the monies were utilized as such and were indeed utlised for wholly different purposes. Bipinchandra maintains that a considerable portion of the monies went to Jayesh. A sum in excess of RM5 million was utilized by the plaintiff to purchase over four million shares in its holding company, KGMB, for the purposes of increasing the price of KGMB shares on the date of listing. The legality of such a transaction warrants consideration given the purport of section 67 of the Companies Act 1965.

[112] In these circumstances we have no option but to reluctantly remit this case for re-hearing to the High Court. It would not be tenable for this court to undertake the task of making primary findings of fact in respect of the numerous issues that have not been addressed in the current judgment.


The company announced: the Court of Appeal of Malaysia had on 5 September 2016 via Grounds of Judgment declared a mistrial and ordered to remit this case for re-hearing before a different judge in the High Court.

Simply unworthy of a listed company: undocumented transfers, a cash cheque, large amount of cash in the boot of a car, no board approval, etc, etc, etc.

It also puts some severe question marks regarding the auditing.

The current share price of Kamdar after all those years is only RM 0.36.

Kamdar: "It's a messy family affair" (4)

I have written before about Kamdar.

The company announced:


Further to the announcement made on 14 October 2014 pertaining to the issuance of Writ of Summons together with Statement of Claims to Bipinchandra A/L Balvantrai, Jayesh R. Kamdar Rajnikant and Yap Kim Hong (“the Defendants”), the Board of Directors of Kamdar Group (M) Berhad (“KGMB” or “the Company”) wishes to announce that the Learned High Court Judge had on 1 June 2015 dismissed its wholly-owned subsidiary, Kamdar Sdn Bhd’s (“KSB” or “the Plaintiff”) claim against the Defendants that the Plaintiff is to pay to the 3 Defendants RM60,000.00 each in cost.

KSB will decide whether to appeal the decision only after due consultation with it's lawyers.

Kamdar: "It's a messy family affair" (3)

I wrote before about Kamdar: here and here. In some detail:


Assets : Amount due from Director / Other Receivables – RM8,842,306
Liability : Amount due to Shareholders –RM 8,763,089

.....while it looks like the asset and liability roughly cancel each other out, there might still be a problem for the Kamdar Group in collecting the amount due from Director.


It appears that the above "problem" might indeed become a reality, the company made the following announcement:


The Board of Directors of Kamdar Group (M) Berhad (“KGMB” or “the Company”) wishes to announce that the High Court of Kuala Lumpur on 3 October 2014 had issued a Writ of Summons together with Statement of Claims to Bipinchandra A/L Balvantrai, Jayesh R. Kamdar Rajnikant and Yap Kim Hong  and on 9 October 2014 Kamdar Sdn Bhd (“KSB” or “the Plaintiff”), a wholly owned subsidiary of KGMB, had served the same to the 3 Defendants via Messrs Amrit & Company, the solicitors of KSB to initiate proceedings to recover the alleged withdrawal of funds totalling RM8.7 million and to claim general, aggravated and exemplary damages, compound interest and such further and other relief as the court deems fit.

Kamdar: "It's a messy family affair" (2)

I wrote about the Kamdar Group before. The special investigative audit has been completed and the results have been announced.


The Special Auditors have found that there were four non-business withdrawals transactions amounting to RM 8,842,306 effected from KSB’s bank accounts from 23rd March till 26th March 2005 by two individuals who were former officers of KGMB.

1.  RM 2,420,000 was on 23rd March 2005 withdrawn by way of a cash cheque that was encashed by two individuals.

2. RM 5,762,306 was on 23rd March 2005 utilized to purchase a bank draft for the purpose of purchasing 4,801,920 shares in KGMB from the under-subscribed portion of the shares offered for sale during the listing. These were bought in the name of a third party who claims to be a proxy for one of the individuals. When the shares were sold thereafter the proceeds were given to one of the individuals.

3. RM 580,000 was on 25th March 2005 paid by cheque to the one of the individuals for non KSB business purposes.

4. RM 80,000 was on 26th March 2005 transferred directly to the second individual’s account from KSB’s account by way of internal transfer advice. It was repaid on 11th January 2011. This was an unauthorized payment and could amount to an unauthorised loan.

All the cheques and instructions for the above transactions were signed solely by the same individual.
Several shareholders advanced a sum of RM 8,763,089 to KSB from 28th March 2005. There is no conclusive proof as to what these advances were for.

The Special Auditors concluded that in the General Ledger of KSB, the above transactions were wrongly recorded and the financials were misstated to indicate that they were loans taken by a former director and were subsequently set off by the advances from the shareholders.

MATERIAL IMPACT ON FINANCIALS
The Special Auditors are of the opinion that whilst there is no impact on the profitability of the company, the Balance sheet for that particular and subsequent years should have reflected these as :-
Assets : Amount due from Director / Other Receivables – RM8,842,306
Liability : Amount due to Shareholders –RM 8,763,089


The above does not sound good. First of all, it all sounds terribly messy, unworthy of a listed company. Secondly it begs the question why it took eight years to uncover all these facts. Thirdly, while it looks like the asset and liability roughly cancel each other out, there might still be a problem for the Kamdar Group in collecting the amount due from Director.

Kamdar: "It's a messy family affair"

The cover story of The Edge Malaysia of March 24, 2014:

A contractor, RM 8.7m & wrangling

in the House of Kamdar

A very confusing story about the Kamdar family, their listed company, and a certain contractor Yap Kim Hong, who claims that the shares in his account were held as a proxy.

I can't follow the story, too many parties involved, too many contradicting or vague statements.

However, there is one particular paragraph which sounded rather alarming, and Bursa Malaysia issued a query regarding that matter:


Reference is made to Bursa's query on the following statement under paragraph three (3) of page 70 in the article in The Edge Malaysia entitled "Wrangling In The House Of Kamdar" dated 24 March - 30 March 2014 :-

"The RM5.7 million was part of RM8.7 million taken out of [subsidiary] Kamdar Sdn Bhd in 2005"

The Company wishes to clarify that the Board of Directors has taken legal advice on the matter and has been and continues investigating the matter and is in the process of gathering evidence of the wrongdoing and will take any and all the necessary steps including taking steps to recover any monies withdrawn without authorization or unlawfully.


The following announcement indicated already that a family squabble was going on:


LETTER TO SHAREHOLDERS IN RELATION TO THE
CALLING FOR AN EGM TO REMOVE EACH OF THE FOLLOWING FROM THE OFFICE OF DIRECTOR:

(1) KAMAL KUMAR KISHORCHANDRA KAMDAR (NRIC NO. 700510-71-6031)
(2) RAJESH KUMAR A/L GEJINDER NATH (NRIC NO. 680516-08-5845)
(3) LIANG AH WAH @ FRANK LIANG (NRIC NO. 461221-01-5073)
(the "Specified Directors")

AND TO APPOINT EACH OF THE FOLLOWING TO BE DIRECTOR OF KAMDAR:
(1) JUGAL KISHOR SHIVLAL (NRIC NO. 590526-71-5047)
(2) MEGAT ABDUL MUNIR BIN MEGAT ABDULLAH RAFAIE (NRIC NO. 700104-08-6791)
(the "Proposed New Directors")

AND TO REMOVE ANY OTHER PERSON WHO MAY BE APPOINTED AS A DIRECTOR OF KAMDAR AT ANY TIME FROM 15 MARCH 2013 UP TO AND INCLUDING THE CONCLUSION OF THIS EGM (INCLUDING ANY ADJOURNMENT THEREOF)


For me, business itself is already difficult enough, let alone with the founding family fighting among themselves.