Linear Corp Bhd, which is currently being investigated by the Securities Commission (SC) and Bursa Malaysia on the status of its RM1.66 billion King Dome contract, has received a statutory declaration (SD) and Letter of Indemnity (LOI) dated June 17, 2010 from a former director who has endeavoured to “deliver the project” or “indemnify” the company in the event of losses.
The SD and LOI were dated June 17, 2010, coincidentally the same day The Edge Financial Daily published the story that a scandal could possibly be brewing in the small cooling systems company.
According to a Bursa Malaysia filing yesterday, Linear said it received the SD and LOI from Alan Rajendram Jeya Rajendram that spelt out several “oral undertakings” given at the company’s board meeting on May 18. Rajendram resigned from the board on May 18, 2010.
The company said at that board meeting, the director had undertaken to “deliver” the King Dome project to Linear, to “indemnify” Linear in the event of any loss, including refund of the cash advanced and to take over the Letter of Award at cost from Linear in the event Linear decided not to proceed further.
It said a timeline until Nov 30, 2010 had been set.
Linear also said serious concerns expressed by Bursa Malaysia were deliberated at that board meeting following which a director had accepted full responsibility for the financial commitment and exposure of the company to the King Dome project.
The controversy surrounding Linear stems from the announcement of a RM1.66 billion district cooling project awarded by Seychelles-based Global Investment Group Inc (GIG) in relation to the little-known King Dome project in Manjung, Perak, which was then touted the “world’s biggest dome” housing an indoor city.
This announcement sent its shares surging nearly fourfold in a matter of days at the end of last year. Subsequently, Linear disclosed that almost all of its cash reserves, totalling RM36 million, had been advanced to GIG, while the company raised concerns over its recoverability and the project itself.
In its filing to Bursa Malaysia on June 4, Linear said there was “no evidence of any significant progress towards the execution of the contract” and “no documentary evidence to demonstrate the overall liability of the King Dome project”.
The company had said it was seeking to recover the RM36 million that was given by one of its directors in an “autocratic manner” as an advance in relation to the contract.
Linear yesterday also said it was extending its full cooperation to the SC and Bursa Malaysia in connection with their ongoing investigations into the company.
This article appeared in The Edge Financial Daily, June 22, 2010.
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