Atlantis: Sabah’s proposed new city below the sea
MALAYSIA TODAY - SPECIAL REPORT
by Selvaraja Somiah selvaraja_1@hotmail.com
I remember vividly December 15th last year when my article "ACA NOT SEEN TO BE SERIOUS" appeared in the Daily Express Sabah.
At that time I did feel some anxiety, though not outright fear, when I received those few threatening phone calls regarding the article from certain individuals who did not want me to reveal too much. I wasn't afraid of being bullied into silence. In fact, it was mixed feelings as, on the one hand, I had people whom I knew who did not want me to spill the beans and, on the other hand, I had readers who wrote to me, who called up, and who approached me whenever they saw me storming in and out of Kota Kinabalu Airport, just to say they wanted more exposes.
It was heartening and uplifting. It is these positive comments -- the feedback and appreciation -- that inspired me to further investigate a piece of land of approximately 0.971 hectares held under Kota Kinabalu Town Lease No 017538788. The land is actually submerged underwater but was sold by Permodalan Sabah Berhad [PSB] for a price of RM3.5 million and charged to MBF Finance Bhd for RM131 million based on a fancy development plan that can never materialise unless one wants to build an underwater city like Atlantis.
It was in 1992 that Elite Consortium Sdn Bhd, a company incorporated under the Companies Act 1965, entered into a Sales & Purchase Agreement with Permodalan Sabah Berhad to purchase the 0.971 hectare land submerged underwater [unreclaimed] -- located along the seafront of Jalan Haji Saman between the Police Marina and the Old Kota Kinabalu Harbour -- for a consideration of RM3.5 million. By the terms and conditions of the agreement, a deposit of RM200,000 was to be paid on signing the agreement while the balance of RM1.8 million was to be paid over six months from the date of the S&P agreement and another RM1.5 million over 12 months.
However, Elite Consortium was unable to pay the first instalment of RM1.8 million as required under the S&P agreement. An extension of three months till the 23rd of July 1993 was then given and, in July, a further extension till the 23rd of October 1993.
On the 12th of April 1993, Elite Consortium submitted a plan to the Kota Kinabalu Municipal Council [MPKK] through its architect, Messrs Arkitek Billings, Leong & Tan, to develop the land into a 280-room, 24-storey, four-star hotel, with 21 floors of condominium apartments and a 128 unit six-storey shop and office block.
On the 30th of July 1993, MPKK informed Elite through its architect that the proposal was still under consideration and some amendments and certain revisions were required before it could be approved. The amendments and revisions were immediately accepted and agreed upon. In November 1993, MPKK approved the proposal to develop the land into an amended 21-storey four-star hotel with a 17-storey office block and eight units of six storey shophouses.
Armed with MPKK’s approval, Elite had to move fast, as time was running out in its payment commitment to Permodalan as per the S&P agreement. A revaluation on the land was crucial and a valuation report was most needed. A Kuala Lumpur base real estate valuer was engaged to value the land. The land was valued for RM27 million, inflating the value ten fold.
With the enhanced value now at RM27 million, Elite had to strike while the iron was hot and it started exploring the possibility of selling the land. It was decided the most feasible game plan was to sell the 0.971 hectare land with its approved development plan to a public listed company for not less than RM18 million.
Apparently, one of the directors of Elite Consortium, Mr Yip Yee Foo, had dealings with REPCO Holdings Berhad, a public company listed on Malaysia’s Second Board. Mr Yip had played a crucial role in REPCO’s listing exercise in 1991 when it acquired a 100% interest in an automotive parts dealer, Repco [Malaysia]. Hence was the connection between REPCO and Elite Consortium.
Simultaneously, Mr Yip entered into negotiations with KOPEKS, the Sabah Government Workers Thrift and Loan Society, for Elite Consortium and KOPEKS to jointly acquire REPCO Holdings. A deal was struck between the KOPEKS Chairman, Mr Bungga Berut, and Mr Yip. KOPEKS then appointed Mr Yip as the consultant for the deal.
Many members of the KOPEKS board at that time were against the deal and were sceptical that the acquisition of REPCO’s shares would benefit KOPEKS. Mr Bungga, however, thought otherwise and he was extremely gung-ho about the REPCO acquisition. The KOPEKS board, for all intents and purposes, was just a rubber stamp as all decisions were bulldozed by Mr Bungga who had a vested interest in the whole deal.
Sometime in November 1993, a preliminary meeting was held in Kuala Lumpur where Mr Yip, on behalf of Elite, entered into a Memorandum of Understanding with three shareholders of REPCO for the purchase of 19.2% of the total issued and paid-up capital of REPCO Holdings Berhad totalling 2,690,000 shares.
Subsequently, KOPEKS entered into a Conditional Agreement with Mr Tan Hah Sing to acquire 1,000 shares in Tan Hah Sing Holdings Sdn Bhd which owned 3,948,000 shares in REPCO Holdings Berhad representing 28.4% of the issued and paid-up capital of REPCO.
With the Memorandum of Understanding and Conditional Agreement, both KOPEKS and Elite Consortium would jointly have effective control of REPCO Holdings Berhad. KOPEKS and Elite called this alliance the REPCO Agreement.
In the meantime, while all this wheeling and dealing was going on, Permodalan Sabah Berhad had still not received its full payment for the underwater land other than the initial deposit of RM200,000.
Elite Consortium was now getting very desperate as it had defaulted on its payment to Permodalan Sabah Berhad so it suggested that Mr Bungga Berut approach Innosabah Securities Sdn Berhad to seek financial assistance on the basis of the REPCO Agreement. Understandably, Innosabah was very impressed with the whole deal.
Innosabah thus agreed to extend financing to Elite Consortium based on the following terms and conditions:
1] Innosabah would arrange a revolving loan of RM18 million from Bank Bumiputra Malaysia Berhad [BBMB].
2] Elite Consortium would arrange for Permodalan Sabah Berhad to charge the 0.971 hectare land to BBMB as security for this loan.
3] Innosabah would utilise the BBMB loan to:
[a] pay Permodalan Sabah Berhad the balance of the purchase price of the 0.971 hectare land.
[b] pay for the acquisition of the 19.2% interest in REPCO Holdings Berhad.
4] The 0.971 hectare land (now charged to BBMB) would be sold to REPCO Holdings Berhad for RM20 million.
5] The proceeds of the RM20 million from REPCO would be used to fully repay the BBMB loan.
At the end November 1993, Permodalan Sabah Berhad, by way of a third party charge, charged the 0.971 hectare land to BBMB.
In the second week of December 1993, BBMB released RM18 million to Innosabah who then paid Permodalan Sabah Berhad RM3.3 million as full payment for the land plus RM14.7 million for the acquisition of the REPCO shares.
Elite Consortium now became the beneficial owner of a 0.971 hectare piece of land and 19.2% of the issued and paid-up capital of REPCO Holdings Berhad, financed entirely through borrowings.
In the meantime, the 0.971 hectare land with its fancy development plans approved by MPKK, now charged to BBMB for RM18 million, was again re-valued. Though there was no physical change to the land and it was still submerged underwater, the new valuation bumped up the value of the land to an exorbitant RM150 million.
Armed with this new valuation of RM150 million Elite applied for further financing from MBF Finance Berhad. The game plan was similar to the REPCO arrangement except that this time Pengkalen Industrial Holdings Berhad, another public listed company, was used as the vehicle.
In February 1997, MBF Finance Berhad approved and dispersed a loan of RM131 million while the 0.971 hectare land changed ownership from Repco Holdings Berhad to Pengkalen Industrial Holdings Berhad.
Up to today, the 0.971 hectare land is still submerged below water and no development of any kind has been started on the land. Public listed companies and banks, with the collusion of Permodalan Sabah Berhad, have been manipulated to fill the pockets of the shareholders of a private company, Elite Consortium Sdn Bhd.
by Selvaraja Somiah selvaraja_1@hotmail.com
I remember vividly December 15th last year when my article "ACA NOT SEEN TO BE SERIOUS" appeared in the Daily Express Sabah.
At that time I did feel some anxiety, though not outright fear, when I received those few threatening phone calls regarding the article from certain individuals who did not want me to reveal too much. I wasn't afraid of being bullied into silence. In fact, it was mixed feelings as, on the one hand, I had people whom I knew who did not want me to spill the beans and, on the other hand, I had readers who wrote to me, who called up, and who approached me whenever they saw me storming in and out of Kota Kinabalu Airport, just to say they wanted more exposes.
It was heartening and uplifting. It is these positive comments -- the feedback and appreciation -- that inspired me to further investigate a piece of land of approximately 0.971 hectares held under Kota Kinabalu Town Lease No 017538788. The land is actually submerged underwater but was sold by Permodalan Sabah Berhad [PSB] for a price of RM3.5 million and charged to MBF Finance Bhd for RM131 million based on a fancy development plan that can never materialise unless one wants to build an underwater city like Atlantis.
It was in 1992 that Elite Consortium Sdn Bhd, a company incorporated under the Companies Act 1965, entered into a Sales & Purchase Agreement with Permodalan Sabah Berhad to purchase the 0.971 hectare land submerged underwater [unreclaimed] -- located along the seafront of Jalan Haji Saman between the Police Marina and the Old Kota Kinabalu Harbour -- for a consideration of RM3.5 million. By the terms and conditions of the agreement, a deposit of RM200,000 was to be paid on signing the agreement while the balance of RM1.8 million was to be paid over six months from the date of the S&P agreement and another RM1.5 million over 12 months.
However, Elite Consortium was unable to pay the first instalment of RM1.8 million as required under the S&P agreement. An extension of three months till the 23rd of July 1993 was then given and, in July, a further extension till the 23rd of October 1993.
On the 12th of April 1993, Elite Consortium submitted a plan to the Kota Kinabalu Municipal Council [MPKK] through its architect, Messrs Arkitek Billings, Leong & Tan, to develop the land into a 280-room, 24-storey, four-star hotel, with 21 floors of condominium apartments and a 128 unit six-storey shop and office block.
On the 30th of July 1993, MPKK informed Elite through its architect that the proposal was still under consideration and some amendments and certain revisions were required before it could be approved. The amendments and revisions were immediately accepted and agreed upon. In November 1993, MPKK approved the proposal to develop the land into an amended 21-storey four-star hotel with a 17-storey office block and eight units of six storey shophouses.
Armed with MPKK’s approval, Elite had to move fast, as time was running out in its payment commitment to Permodalan as per the S&P agreement. A revaluation on the land was crucial and a valuation report was most needed. A Kuala Lumpur base real estate valuer was engaged to value the land. The land was valued for RM27 million, inflating the value ten fold.
With the enhanced value now at RM27 million, Elite had to strike while the iron was hot and it started exploring the possibility of selling the land. It was decided the most feasible game plan was to sell the 0.971 hectare land with its approved development plan to a public listed company for not less than RM18 million.
Apparently, one of the directors of Elite Consortium, Mr Yip Yee Foo, had dealings with REPCO Holdings Berhad, a public company listed on Malaysia’s Second Board. Mr Yip had played a crucial role in REPCO’s listing exercise in 1991 when it acquired a 100% interest in an automotive parts dealer, Repco [Malaysia]. Hence was the connection between REPCO and Elite Consortium.
Simultaneously, Mr Yip entered into negotiations with KOPEKS, the Sabah Government Workers Thrift and Loan Society, for Elite Consortium and KOPEKS to jointly acquire REPCO Holdings. A deal was struck between the KOPEKS Chairman, Mr Bungga Berut, and Mr Yip. KOPEKS then appointed Mr Yip as the consultant for the deal.
Many members of the KOPEKS board at that time were against the deal and were sceptical that the acquisition of REPCO’s shares would benefit KOPEKS. Mr Bungga, however, thought otherwise and he was extremely gung-ho about the REPCO acquisition. The KOPEKS board, for all intents and purposes, was just a rubber stamp as all decisions were bulldozed by Mr Bungga who had a vested interest in the whole deal.
Sometime in November 1993, a preliminary meeting was held in Kuala Lumpur where Mr Yip, on behalf of Elite, entered into a Memorandum of Understanding with three shareholders of REPCO for the purchase of 19.2% of the total issued and paid-up capital of REPCO Holdings Berhad totalling 2,690,000 shares.
Subsequently, KOPEKS entered into a Conditional Agreement with Mr Tan Hah Sing to acquire 1,000 shares in Tan Hah Sing Holdings Sdn Bhd which owned 3,948,000 shares in REPCO Holdings Berhad representing 28.4% of the issued and paid-up capital of REPCO.
With the Memorandum of Understanding and Conditional Agreement, both KOPEKS and Elite Consortium would jointly have effective control of REPCO Holdings Berhad. KOPEKS and Elite called this alliance the REPCO Agreement.
In the meantime, while all this wheeling and dealing was going on, Permodalan Sabah Berhad had still not received its full payment for the underwater land other than the initial deposit of RM200,000.
Elite Consortium was now getting very desperate as it had defaulted on its payment to Permodalan Sabah Berhad so it suggested that Mr Bungga Berut approach Innosabah Securities Sdn Berhad to seek financial assistance on the basis of the REPCO Agreement. Understandably, Innosabah was very impressed with the whole deal.
Innosabah thus agreed to extend financing to Elite Consortium based on the following terms and conditions:
1] Innosabah would arrange a revolving loan of RM18 million from Bank Bumiputra Malaysia Berhad [BBMB].
2] Elite Consortium would arrange for Permodalan Sabah Berhad to charge the 0.971 hectare land to BBMB as security for this loan.
3] Innosabah would utilise the BBMB loan to:
[a] pay Permodalan Sabah Berhad the balance of the purchase price of the 0.971 hectare land.
[b] pay for the acquisition of the 19.2% interest in REPCO Holdings Berhad.
4] The 0.971 hectare land (now charged to BBMB) would be sold to REPCO Holdings Berhad for RM20 million.
5] The proceeds of the RM20 million from REPCO would be used to fully repay the BBMB loan.
At the end November 1993, Permodalan Sabah Berhad, by way of a third party charge, charged the 0.971 hectare land to BBMB.
In the second week of December 1993, BBMB released RM18 million to Innosabah who then paid Permodalan Sabah Berhad RM3.3 million as full payment for the land plus RM14.7 million for the acquisition of the REPCO shares.
Elite Consortium now became the beneficial owner of a 0.971 hectare piece of land and 19.2% of the issued and paid-up capital of REPCO Holdings Berhad, financed entirely through borrowings.
In the meantime, the 0.971 hectare land with its fancy development plans approved by MPKK, now charged to BBMB for RM18 million, was again re-valued. Though there was no physical change to the land and it was still submerged underwater, the new valuation bumped up the value of the land to an exorbitant RM150 million.
Armed with this new valuation of RM150 million Elite applied for further financing from MBF Finance Berhad. The game plan was similar to the REPCO arrangement except that this time Pengkalen Industrial Holdings Berhad, another public listed company, was used as the vehicle.
In February 1997, MBF Finance Berhad approved and dispersed a loan of RM131 million while the 0.971 hectare land changed ownership from Repco Holdings Berhad to Pengkalen Industrial Holdings Berhad.
Up to today, the 0.971 hectare land is still submerged below water and no development of any kind has been started on the land. Public listed companies and banks, with the collusion of Permodalan Sabah Berhad, have been manipulated to fill the pockets of the shareholders of a private company, Elite Consortium Sdn Bhd.
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