KUALA LUMPUR (June 13): Genisys Integrated Engineers Pte Ltd, which is based in Singapore, and UEM Bhd are seeking to remove two liquidators of UEM Genisys Sdn Bhd, a former subsidiary of UEM, for negligently losing RM15.681 million that it held on behalf of the company over an eight-year period.

The losses occurred between 2015 and 2023, and the liquidators Onn Kien Hoe and Mok Yuen Lok are said to have only realised it sometime last September, and filed a police report the next month.

Genisys and UEM counsel Gideon Tan said on Thursday that the funds were removed from the liquidators' fixed deposit accounts via 48 transactions between 2015 and 2023, and the liquidators lodged the police report in October 2023.

“My clients, who are the contributories, are seeking the removal of the liquidators that had resulted in the losses. There has been such negligence and inaptitude conducted by the liquidators resulting in the losses.

“They (the liquidators) had already admitted that the monies were misappropriated, yet they want to remain as liquidators of the company. Should they remain, it would be seen as a conflict of interest, as no proper independent accountant was appointed to investigate how the losses occurred,” he told High Court Judge Ahmad Murad Abdul Aziz.

The purported loss of funds, according to the police report filed by the two liquidators, were due to the forging of their signatures on the banking documents by a senior staff, resulting in the 48 transactions between 2015 and 2023, and they have notified the insurance company of the losses.

Tan added that despite the two liquidators having come up with the sum losses only in January this year, the contributories felt that there could be more as the sum did not include interest which they expect to be another sum in excess of RM2 million.

For these reasons, the counsel, who appeared with Ashvinpal Kaur, said they were seeking the removal of the two liquidators who had been appointed since January 2006.

Tan said any liquidator that had faced such a problem would have immediately resigned; but in this case, they had chosen to stay on.

UEM and Genisys, which are the two contributories, had filed a notice of motion last September to seek Ong and Mok’s removal as liquidators following the loss of the UEM Genisys funds.

In their application, the companies alleged that the liquidators had failed in their statutory duty to display the amount, skill and diligence in conducting the affairs of UEM Genisys, and had failed to take expeditious steps for the disposal of the liquidation process of the company for the benefit of the contributories after nearly 18 years.

Furthermore, they want Tan Peng San to be appointed to replace the two liquidators. In January, the court had allowed the appointment of Peng San on a temporary basis.

However, Tan told Ahmad Murad that the interim liquidator was not allowed to access the liquidators’ accounts or investigate the losses.

The UEM subsidiary does not have any more creditors as all of them have been settled and the company has remained solvent.

One of the 48 transactions made, which resulted in the loss of RM345,000, was paid to a company for which they also acted as liquidators.

Amount recovered from personal funds and dividends paid

Datuk K Kirubakaran, who appeared with Martin Cho for the two liquidators, replied that the lost sum had been replaced from their clients’ personal funds, and hence there was no need to replace them as liquidators.

Furthermore, he said that dividends had been paid to the contributories over the years.

Ong and Mok had already appointed an accountant to investigate the losses.

“They have taken steps to counter the losses and should be allowed to remain as liquidators for UEM Genisys,” he added.

“The carelessness of the liquidators cannot be the cause to remove them at best. Negligence can be a cause of action against the liquidators, but the court must be satisfied that the root cause is dishonesty,” he said.

Kirubakaran added that there was no challenge to the lost amount which his clients had replaced.

Besides this, the two liquidators had sought from the court for remuneration to be paid to them for their services.

However, Ahmad Murad said he would decide on the application to remove the liquidators first, and hear on the remuneration later.

Grossly out of proportion carelessness

Tan in reply said the amount lost, which the liquidators had advanced, did not include the interest that could have been gained if the monies had not been lost which amounted to more than RM2 million.

He said a firm may be careless, but this happened over 48 transactions, and this was "grossly out of proportion of carelessness" by the liquidators.

“The loss of RM15.681 million is not a matter of putting the money back, but not taking due care of the funds,” Tan said, adding RM15.681 million was a huge sum.

He said an independent accountant should have been appointed to look into how the losses occurred, but in this case the two liquidators appointed the accountant of their choice and alleged there could not be an independent finding.

In addition, Tan said the interim liquidator appointed by the court, as affirmed in his affidavit, said he had no access to the documents or said accounts.

Ahmad Murad said he would decide on the motion to remove the liquidators on July 10, or alternatively on August 7.

This follows Kirubakaran indicating in court that he would be overseas in early July should the court need further submissions to clarify.