KUALA LUMPUR (Aug 26): Construction company Infraharta Holdings Bhd (KL:IHB) is refuting the allegations and reliefs sought by Consortium Zenith Construction Sdn Bhd (CZC) in a suit against its unit pertaining to issues related to the major roads and Penang third link (PMRT) project.

According to IHB's bourse filing on Monday, CZC alleged that its payments amounting to RM13.12 million made to IHB's wholly-owned subsidiary Infraharta Sdn Bhd (ISB) were tainted with fraud and deceit and that ISB is liable to return the same amount to CZC.

CZC also made similar allegations against Vizione Construction Sdn Bhd, a subsidiary of Vizione Holdings Bhd (KL:VIZIONE) and the second defendant in the suit, with regards to payments amounting to RM15.5 million.

All of these allegations, amongst others, came after ECK Development Sdn Bhd acquired a majority shareholding in CZC, after which it discovered that CZC incurred costs "under suspicious circumstances".

"CZC alleges that among such costs were payments made by CZC to ISB for works carried out under the PMRT project," IHB said.

However, IHB has denied the claims, arguing that the transfer of funds was approved by the then shareholders and board of directors of CZC. It said the funds were transferred in 2017 to be utilised by ISB for another project.

Further, IHB argued that the funds transferred to ISB were unrelated to the PMRT project, although it did not explain the reason CZC paid said funds to ISB.

This as CZC, appointed by the state government of Penang as the main contractor for the construction of PMRT, had sub-contracted a part of the works for the project to Buildmarque Construction Sdn Bhd in August 2018, a year after the ISB payment.

"The board of IHB is of the view that the allegations and reliefs sought in Suit 535 against ISB are baseless and intends for ISB to vigorously resist the claim," the group added.

The Penang state government had originally proposed an undersea tunnel as part of a RM6.3 billion integrated infrastructure project that was awarded to Consortium Zenith BUCG Sdn Bhd, which is a joint venture between Zenith Construction Sdn Bhd and China Railway Construction Ltd, in addition to Beijing Urban Construction Group (BUCG), Sri Tinggi Sdn Bhd and Juteras Sdn Bhd.

CZC, meanwhile, is a special purpose vehicle tasked to execute the infrastructure project.

The project included the construction of three highways to alleviate traffic congestion on the island. The three major roads are a 4.2km bypass from Gurney Drive to Lebuhraya Tun Dr Lim Chong Eu, a 4.6km bypass between Lebuhraya Tun Dr Lim Chong Eu and Bandar Baru Air Itam, and a 12km paired road from Jalan Tanjung Bungah to Teluk Bahang.

Shares of IHB closed down one sen or 6.45% to 14.5 sen on Monday for a market capitalisation of RM58.8 million.