Halim Saad’s ex-staff awarded RM8.8m over shelved Kazakhstan project

Boo Su-Lyn
Cekal Teguh was ordered to pay the total sum of RM8,779,378.49 to the claimants within 30 days of the date of the award on August 13. — Reuters pic

KUALA LUMPUR, Aug 23 — The Industrial Court ordered a company owned by local tycoon Tan Sri Halim Saad to pay six former employees almost RM8.8 million in back wages and outstanding salaries and claims after a methanol plant project in Kazakhstan was cancelled.

Six engineers and oil and gas professionals filed a constructive dismissal complaint against Malaysia-based Cekal Teguh Sdn Bhd and Hong Kong-based Kazakhstan Methanol Limited, both of which were owned by Halim, in March 2016.

“Having considered the evidence in its totality and the submissions of counsels for both parties, the court holds that the first respondent has failed to discharge its legal burden of proof that the said dismissal is with just cause or excuse,” Industrial Court chairman Rajeswari Karupiah said in her judgment on August 13, referring to Cekal Teguh, sighted by Malay Mail.

“The court therefore orders that the first respondent pay each of the claimants back wages of three months together with their outstanding salaries and claims at the exchange rate of RM3.5 per US$1 as follows:”

The court also instructed Cekal Teguh to pay the total sum of RM8,779,378.49 to the claimants within 30 days of the date of the award on August 13.

Project director Datuk Syed Othman Abu Bakar, process/ commissioning manager Mohd Yunus Solong, project/ engineering manager Ahmad Fuad Abd Wahab, project coordinator Syed Hassan Syed Azmi, technical/ construction manager Mohd Rokis Mohd Ghulam, and project control/ services manager Munir Abu Bakar — who were all hired in 2014 for the Kazakhstan project — considered themselves to be constructively dismissed after failing to receive their salaries by March 2016 after they tendered their resignation from the project in December 2015 with three months’ notice.

According to the Industrial Court ruling, Halim requested to defer half of the six claimants’ salaries from December 2014 to May 2015 because he was facing cash flow and financing problems.

However, the 50 per cent reduction of salaries continued until September 2015. In October 2015, all of the claimants, except for Syed Hassan who was paid half of his salary, were only paid 25 per cent of their salaries.

The claimants were not paid any salary since November 2015, according to the ruling.

The ruling said James Chan from Sumatec Resources Berhad, a service provider in the downstream sector of the oil and gas industry, had drawn up a document dated March 11, 2014 and signed by Halim on the same day that he confirmed the engagement of the claimants in the Kazakhstan gas project. Chan was then a non-independent and non-executive director at Sumatec, while Halim is currently Sumatec’s vice chairman.

The six claimants had been hired for the Kazakhstan project on three-year contracts from 2014 until 2017 with monthly salaries ranging between US$6,000 for project coordinator Syed Hassan and US$65,000 for project director Syed Othman. The other four were given monthly salaries in tens of thousands of US dollars.

According to the ruling, Munir testified that the claimants did not pay income tax because their tax consultant claimed the wages were not taxable.

Cekal Teguh took the position that it was not the claimants’ employer and their true employer was Hong Kong-based Kazakhstan Methanol Limited, which was not present in court proceedings.

The Industrial Court said Cekal Teguh claimed that it had no liability or legal responsibility to respond to claimants’ allegations of breach of contract since the employment contracts were between Kazakhstan Methanol Limited and the claimants.

But the court noted that claimants reported to both Halim and Cekal Teguh managing director Meor Othman Meor Lope, claimants required Halim’s and Cekal Teguh’s approval for travel budgets, and payments were made by Cekal Teguh.

The court further noted that Kazakhstan Methanol Limited’s incorporation fees and expenses were paid for by Cekal Teguh.

“There appears to be no real separation between the entities as the claimants had at all times performed their work under the instruction, supervision and control of TSH and were paid for the same either by or through the first respondent,” said the ruling, referring to Halim (TSH) and Cekal Teguh (first respondent).

Cekal Teguh also failed to deny that it was the claimants’ employer or respond to the claimants when they wrote letters on January 26, 2016 to Halim, Cekal Teguh, and Kazakhstan Methanol Limited that if they were not paid their salaries by the end of three months’ notice by March 30 2016, they would consider themselves constructively dismissed and seek legal recourse.

“In the circumstances of the case, I have no hesitation in ruling that the first respondent is the employer of the claimants,” said the court.

Halim, who built the Renong/ UEM conglomerate, is considered a protege of Tun Daim Zainuddin when the latter was finance minister in the 1980s during Tun Dr Mahathir Mohamad’s first term of office, who implemented a privatisation policy for infrastructure projects then to grow Malay businesses.

Daim currently heads the quasi official Council of Eminent Persons that advises Prime Minister Dr Mahathir.

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