Chong Ket Pen's Case, When Trust Should be Keep

Business is not only about how we make money. Business is not only about advantages. There is more important thing. It is about trust. How we keep the trust is the main point.

Unfortunately, not everyone appreciates it well. A bad news is coming from a man called Chong Ket Pen. He got the trust but he does not treat it well. He committed fraud in the business. As a result, many parties such as Global Capital Limited Indonesia and PT Anglo Slavic Utama (PT ASU) became the victims. Losses cannot unavoidable.

Chong Ket Pen

Chong Ket Pen was the Excecutive Director of Protasco Berhad (Protasco), a Malaysia-based company engaged in the business of investment holding. He was one of the shareholders of the company as much as 15.5%.

Chong Ket Pen wanted to maintain his position in the company. Therefore, he approached Global Capital Limited Indonesia (GCL) and making a deal. Chong Ket Pen guaranteed GCL that he will propose to the Board of Protasco to run a new business subsidiary in the Oil and Gas (O&G) sector. 

Then, GCL got a 27.11% stake in Protasco for USD 24 million or 33% premium over the market price. The deal, viewed as a 'premium' was done on the guarantee of Protasco Berhad's planned venture into the O&G sector.

As stated in the suit: "The acquisition of the shares at a huge premium was a risk for plaintiff, given the performance and financial situation of Protasco Bhd. Nevertheless, that risk was undertaken, given that 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."

Next, 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). Unfortunately, the deal was failed because of non-fulfillment of conditions.

The Indonesia-based company is claiming USD88 million from Chong Ket Pen over his act of conrtact breach, including loss of investment and future profits for the stake in Protasco Bhd. 

Chong Ket Pen had made the proposal for the transaction of Protasco's shares without disclosing to the Board that he has personal interest in obtaining control over the company, through the Investment Guarantee Agreement that signed on November 3rd, 2012.

Due to this finding, Chong Ket Pen did the scheming. He blamed on GCL investor Tey Por Yee. He made wrong information by alleging Tey Por Yee for conducting insider trading, accusing him of discreetly being the beneficial owners of PT ASU.

The scandal is not over yet. Chong Ket Pen also share hoax by told the false report and data to a Malaysian prominent business media The Edge to told the false report and data. The media should verified the truth of the news. However, they did not do it. On September 10th, The Edge published inaccurate information about Chong Ket Pen's case.

The other fact is Bursa Malaysia public information also revealed that Chong Ket Pen has been drawing unrealistic remunerations from Protasco 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 operation, remuneration, payments of dividends and salaries for his own benefit at the expense and the best interests of the company.

 It was also reported that Prostaco Bhd had recently lost a huge contract, as it's 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 it's "Reduce" rating on Protasco Bhd at MYR 20 cents with a lower target price of MYR17 cents (from MYR 30 cents). Weak job execution and poor contract visibility is likely to wigh on it's shares price. 

 

Chong Ket Pen did not only break the trust, but also the reputation of GCL. Therefore, in September 2018 GCL filed a police report against The Edge for misreporting, illegally obtaining confidential information, fraudulently publishing flase and inaccurate information. 

Besides, GCL also filed a lawsuit against Chong Ket Pen to AG Chambers for Rp1.28 trillion, in breach of contract to the Personal Guarantee Agreement, that Chong Ket Pen has signed with GCL on 3 November 2012.

However, GCL is not one and only party who report the fraudulence that Chong Ket Pen did. In December 2018, PT ASU also has filed a report to Indonesian police on fraudulence committed by Chong Ket Pen and Tjoe Yudhis Gathrie. 

This is the Chong Ket Pen's case. As society, I feel sorry for what happened. I didn't suppose that a company leader like Chong Ket Pen did something that he didn't do it. Businessman should be a role model for society. However, Chong is not. He is a bad example that he can't follow.

In this case, I think it what Chong Ket Pen did can be a lesson for everyone. If you get trusted from someone's else, just keep it well. Don't betray it with the bad things. It is not because trust is expensive. It's because trust is priceless.