Sunday, February 16, 2014

Malaysian Tycoon's Dream Bites The Dust: Does He Face Prison Time Again?

Neerja Jetley
Neerja Jetley, Contributor
Forbes Asia
1/19/2014 @ 11:43PM |8,905 views

Malaysian Tycoon's Dream Bites The Dust: Does He Face Prison Time Again?

Ch'ng faces 58 charges for insider trading in shares of his Malaysia Pacific Corporation

Malaysian tycoon Bill Ch'ng Chong Poh, the former chief executive of Malaysia Pacific Corporation, had a dream. Long before Iskandar became Asia's hottest property for real estate developers in Singapore, Malaysia and beyond, he bought 638 acres in the area. An architect by training, he conjured up a blueprint for a 4-million-square-foot development with an international exhibition center, resorts, a cultural showcase and even a cowboy-themed factory outlet mall replete with a sheriff's office and stagecoach rides.

On Jan 10, the Securities Commission of Malaysia took him to task for his "cowboy" style—running roughshod over shareholders—and filed 58 charges of insider trading against him. He allegedly acquired the shares over three months in mid-2008, ahead of a joint venture with the state-run Amanah Raya Bhd for undertaking his dream Iskandar project. Ch'ng has pleaded not guilty. Repeated phone calls to his office went unanswered.

The events began to unfold last month, when a group of activist minority shareholders demanded a forensic financial audit into Malaysia Pacific's accounts to weed out irregularities. They wanted more transparency and better corporate governance. Ch'ng resigned as CEO, handing over the reins to his son Charles Ch'ng, terming it a natural succession plan. If convicted, Ch'ng faces the prospect of up to 10 years in prison and a fine in excess of $300,000.

This would not be the first time Ch'ng would serve time for a white-collar offense. In July 1996, he was jailed for four years in Hong Kong for defrauding International Housing Development Ltd., where he was chairman, of $16 million. He had done it to fuel his dream of taking majority control of the company in 1985. With him in prison were members of the bank that co-conspired in the scheme. The prison term did nothing to dampen his ambition or curb his style.

Ch'ng has always fancied himself as a "white knight," rescuing companies that "were ripe for takeovers." He is widely perceived to have bailed out Singapore's Emporium Holding in the early '90s and was responsible for a string of takeovers during the same period. In an interview given to FORBES ASIA in 2009, he boasted that he was invited by Malaysian political allies and business partners to advise on corporate takeovers back home. And so he returned, after 22 years in Hong Kong. He said his "last major ambition" was to create Asia Pacific Trade & Expo City. Surrounding this would be the LakeHill Resort, with retail, offices and residences. The projects would create 50,000 permanent jobs and 100,000 overall jobs, he detailed. "I want to live to see it," said Ch'ng, who was  70 at the time.

Ch'ng started giving shape to this vision through Malaysia Pacific, a company that he was called to advise in 2004 by billionaire Quek Leng Chan of the Hong Leong Group. By 2005, he was appointed chief executive and the next year his family bought a controlling interest. Ch'ng steered it to profitability, earning media encomiums as "a turnaround guru."
Far from dulling his ambition, the financial crisis served only to fuel it. In 2008, Malaysia Pacific netted $16 million in profits on revenue of $25 million. The top line would jump to $1 billion when the Iskandar project would go on stream, he boasted. Instead of scaling back, he sped up. Now, he is paying the price, as the Minority Shareholder Watchdog Group, Bursa Malaysia and the Securities Commission

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Ch'ng charged with insider trading

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