CEO Morning Brief

Deleum Unit Enters Into Settlement Agreement in Suit Over Alleged Illegal Scheme

Publish date: Wed, 15 May 2024, 10:29 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (May 14): Deleum Bhd's (KL: DELEUM) 60%-owned unit has entered into a settlement agreement with six of the 10 defendants in its RM19.88 million civil lawsuit against its own executives, Petronas Carigali Sdn Bhd executives and its sub-contractors over an alleged illegal scheme.

Under the agreement, Deleum Technology Solutions Sdn Bhd (DTS) — formerly known as Deleum Primera Sdn Bhd (DPSB) — will have to discontinue the suit against the six defendants and pay a sum of RM834,225 to one of the defendants, as part of outstanding invoices.

Besides that, another one of the defendants will admit liability and pay RM100,000 to DTS, as part of the settlement.

"Upon the filing of the notices of discontinuance in respect of the disputes, the disputes shall be deemed as fully and finally settled between the parties," Deleum said in a filing with Bursa Malaysia on Monday.

"Each party agrees to not make negative or disparaging comments about each other to any other person or body in relation to any of the disputes," it added.

The alleged scheme, which is at the centre of the suit filed in November 2020, was purportedly initiated to defraud Petronas Carigali in relation to multiple maintenance and services contracts between the Petronas’ unit and DPSB.

Two senior executives of DPSB were investigated by the Malaysian Anti-Corruption Commission in December 2020 in the commission's investigations into the scheme.

The suit against the company's executives for purported breach of fiduciary duty was filed following a special audit by PwC Consulting Associates (M) Sdn Bhd that was ordered by Deleum.

According to the court documents, the ordered audit discovered improprieties and the possible siphoning of money and kickbacks used to maintain DPSB’s contract with the national oil company. DPSB was awarded a painting and alternative blasting services contract by Petronas in 2014 and another contract in 2017.

The suit, however, was then met with a countersuit by the executives, who alleged that Deleum was aware of the kickbacks that were being paid to executives of Petronas Carigali to ensure jobs continued to go to DPSB.

Apart from the four DPSB executives and two Petronas Carigali executives in the tender department, DPSB also sued three of its subcontractor companies: Synergy Spectacular Sdn Bhd, Semi Hermatics Engineering Sdn Bhd and Hydra Admiral Sdn Bhd.

On March 26, 2021, DTS was suspended from participating in Petronas' tender and contracts amid reports of alleged unethical and integrity issues from the company, linked to the alleged scheme.

However, the suspension was later lifted on Dec 15, 2022.

Shares of Deleum closed seven sen or 4.9% higher at RM1.50, with a market capitalisation of RM602.33 million.

Source: TheEdge - 15 May 2024

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