What We Can Learn from Chong Ket Pen Case

Rumah Sejuta Martabak Mars, TX 75778

Industry and management are two souls of business running. When we do fight for building and maintaining a business, those two factors affecting will always be on top. Being a worker in a startup company needs to deal with that case too since I have to update my information due to the case of every business company. I know it sounds interesting and challenging, but believe me, it is not as easy as it means to be.

As I start to dig for another influencer in the business industry, the name of Chong Ket Pen will always appear in this week. Every news and headlines has him over the venue. My friends who also works on the business agency once tries to ask me when I’ve never heard of him.

“Chong Ket Pen is really a man of the match. Having a big company doesn’t mean that he stops manipulate the others,” He said.

“Wait, who?” I replied without knowing who is the one he was talking about.

“Chong Ket Pen!” He got a little bit annoyed.
This is him, FYI.

Then, we laughed and never talked about him ever again. But today I’ve learned that the case of Chong Ket Pen has never been done. The case developed until now and Chong Ket Pen is now arrested by lawsuit due to the claim of PT Anglo Slavic Indonesia (PT ASI); a company established in Indonesia under the branch of PT Anglo Slavic Utama (PT ASU).

Started in November 3rd, 2012, the case chronology had begun with prior to the agreement. Chong Ket Pen as the Executive Director at Protasco Berhad (Protasco) has been owning 15.5% shares of the company. To be able to enhance the company, he intended to propose a deal with PT ASU and Chong Ket Pen has agreed to acquire the major shares within the contract since PT ASU is known as a big oil company in Indonesia; the one that was awarded by Pertamina for land in Aceh.

As the contract has begun, Chong Ket Pen was truly able to handle the contract properly. But, it turns out that two years later, he started to make an act. He was accusing his partner with false information and framing him into being the beneficial owners of PT ASU. The case was big before whereas it disappeared as the contract and agreement with PT ASU is biased by the media.

In September 2018, the case has been rolling again since it was blown up to the media for the next level. Chong Ket Pen went to the Malaysian media; The Edge. He shared false reports due to the case from the four years ago. By delivering the false accusations once again, PT ASU started to make a fight toward him and brought the shreds of evidence showing that Chong Ket Pen was the one who did the crime. Sounds interesting, right? Now, Chong Ket Pen has to deal within reports from PT ASU since December 2018.

Feeling confused? Let me tell you a clear story:

The Oil and Gas industry of neighboring countries Indonesia and Malaysia is currently being a highlight, as a major shareholder of Protasco Berhad, Global Capital Limited filed a civil suit against the company’s Group Executive Vice-Chairman and Managing Director, Dato’ Sri Chong Ket Pen for alleged abuse of power.

The suit revolves around an Investment Guarantee Agreement initiated by Chong Ket Pen with Indonesian venture capital and asset management company Global Capital Limited on November 3rd, 2012. Chong Ket Pen, under his personal capacity, approached Global Capital Ltd to assist in buying over major shares of Malaysia’s Protasco Bhd from its former beneficial owner – also known as business take-over. In return, shall nominate Global Capital Ltd’s investors as Board member in Protasco Bhd, and all that he wanted is to maintain his position as the company’s Group Managing Director.

In the deal, Chong Ket Pen assured Global Capital Ltd that he will propose to the Board of Protasco Bhd to undertake a new oil and gas business subsidiary. Following that, Global Capital Ltd acquired a 27.11% stake in Protasco – a deal concluded within one month of discussions and negotiations, for USD 24 million or a 33% premium over the market price. The deal viewed as a ‘premium’ was done on the assurance of Protasco Bhd’s planned venture into the oil and gas sector.

As stated in the suit: “The acquisition of the shares at a huge premium was a risk for the plaintiff, given the performance and financial situation of Protasco Bhd. Nevertheless, that risk was undertaken, given that the plaintiff was under the impression that their investment was protected by the assurance given by the defendant, inter alia his guarantees and obligations under the investment Guarantee Agreement”.

Soon after, Protasco Bhd announced that it was set to buy 76% of equity interest of an Indonesian oil and gas company, PT Anglo Slavic Utama (PT ASU) with a value of USD 55 million (Rp800 billion). The deal, however, did not materialize due to non-fulfillment of conditions.

The Indonesia-based company is claiming USD 88 million from Chong Ket Pen over his act of contract breach, including loss of investment and future profits for the stake in Protasco Bhd; loss of margin to finance the acquisition of shares up to USD 18 million; liability of USD 55 million to PT ASU – as guarantor for Chong Ket Pen pursuant to the Investment Guarantee Agreement; and USD 15.5 million as payment for the profit guarantee under the Investment Guarantee Agreement.

Subsequently, it was discovered that Chong Ket Pen had made the proposal for the transaction of Protasco Bhd’s shares without disclosing to the Board that he has a personal interest in obtaining control over the company, through the Investment Guarantee Agreement.

Following this discovery, Chong Ket Pen maneuvered by putting the blame on Global Capital Ltd’s investors, Tey Por Yee and Ooi Kok Aun, putting them under the limelight in 2014 on allegations of criminal breach of trust due to the non-disclosure of interest in a transaction involving USD 20.3 million. They, however, were granted a discharge not amounting to an acquittal by the sessions court in September 2017, which also proved what was brought by Chong Ket Pen as sham documents.

Bursa Malaysia public information also revealed that Chong Ket Pen has been drawing unrealistic remunerations from Protasco Bhd at the peak of USD 576,000 in 2017 and USD 1 million in 2016 respectively, after he gained control over the company. This suggested that Chong Ket Pen entered into business transactions and decisions on the operation, remuneration, payments of dividends and salaries for his own benefit at the expense and the best interests of the company.

Global Capital Ltd came into the thought that Chong Ket Pen has failed to ensure that Protasco Bhd was profitable, with a profit before tax of USD 7.1 million and USD 8.3 million in the third and fourth year under the Investment Guarantee Agreement. Aside from that, a total of USD 26.2 million profit was also guaranteed over the four years.

Furthermore, it was also reported that Protasco Bhd had recently lost a huge contract, as its subsidiary HCM Engineering Sdn Bhd received a letter of termination from Turnpike Synergy Sdn Bhd (TSSB) due to delays in the project, suggesting a USD 622,000 earnings impact. Following this, CIMB IB Research has therefore maintained its “Reduce” rating on Protasco Bhd at MYR 20 cents with a lower target price of MYR17 cents (from MYR 30 cents). A weak job execution and poor contract visibility are likely to weigh on its shares price.

One we can learn from Chong Ket Pen case is we need to keep our agreement clean. Once we say that the business is rolling based on the paper lawsuit, we mustn’t false the reports. If only you have a strong lawsuit background, you may do this thing. But again, false accusation toward our business relatives will kill us slowly in the end. Second, the earnings impact from our business will always be reported. If there is something odd in the reports, we cannot just let it go because the money flowing is written. Last but not least, greed will destroy our dignity in the end.

Hopefully, we all can learn from this Chong Ket Pen story.
Copyright © N Firmansyah
Founder of Artifisial.