Sime Darby - Trouble Looming

KUALA LUMPUR, Aug 12: Is Sime Darby heading for another round of trouble after suffering losses topping RM3 billion last year?

Kumpulan Guthrie Berhad, a company now part of the embattled Sime Darby, recently lost a civil suit to Indonesian firm PT Adhiyasa Saranamas in the Indonesian Supreme Court in excess of US$25 million, which has now ballooned to US$41 million.

An online news portal reported that the matter was brought to the attention of the country's parliament to be resolved following Guthrie's continued refusal to pay up.

“The continued ignorance of the Malaysia government linked company has raised a question mark over the existence of a broker and legal mafia behind the case,” wrote Rakyat Merdeka, the Indonesian online news portal.

The dispute between the two companies began in 2000 when Guthrie Berhad planned to acquire the assets of PT Holdico Perkasa who had been taken over by the government's Indonesian Bank Restructuring Agency (IBRA).

Guthrie hired PT Adhiyasa Saranamas as its mediator to ease procedures in the acquisition of PT Holdico Perkasa, its subsidiaries and its assets such as oil palm plantations in several cities.

As part of the deal, Guthrie had agreed to give a commission of seven percent of the value of the transaction to Adhiyasa, according to the portal.

The Malaysian government-linked firm however was said to have breached the contract by stalling the commission due to Adhiyasa.

Adhiyasa then pursued a variety of legal actions but failed; even filing an appeal at the country's Supreme Court did not bear fruit.

In 2007, armed with a fuller range of documents and evidences, Adhiyasa won its bid to obtain a Supreme Court order against Guthrie to fulfil its obligation to pay the promised commission, with an additional six percent as interest. This again met with resistance, forcing Adhiyasa to file a petition with the South Jakarta District Court to confiscate Guthrie's assets, which was allowed.

Rakyat Merdeka added that Guthrie fought back the judgement to block execution for the payment through PT Holdico Perkasa, the company it had earlier merged with in 2000.

Guthrie, involved mainly in plantation and manufacturing, was acquired in 1981 by then prime minister Dr Mahathir Mohamad through a 'coup' by government investment company Pemodalan Nasional Berhad (PNB) to take over the group at the London Stock Exchange. The takeover allowed Malaysia to return ownership of some 200,000 acres (800 km²) of agricultural land back to Malaysians.

With the government through PNB as the largest shareholder, Guthrie was merged with Sime Darby and Golden Hope plantation to form Synergy Drive, later renamed Sime Darby. Guthrie shares were de-listed on November 1, 2007 and re-listed on November 30, 2007. As of November 2007, Sime Darby was the largest company in Malaysia and the largest plantation firm in the world with a land bank of over 540,000 hectares.