The recent hearing at the High Court involving Pelangi Prestasi Sdn Bhd (PPSB) vs Sabah Forest Industries (SFI) and their manager and receiver, Grant Thornton Consulting (GTC) leaves a lot to be questioned.
Last year, PPSB entered into a deal to acquire a majority stake in SFI from pulp and paper manufacturer Ballarpur Industries Ltd (BILT) for about RM1.2 billion, according to The Edge Markets. This sales agreement would mean that PPSB should take control of SFI and all its assets, which includes timber licenses, which were guaranteed to be renewed by the previous state government.
After PPSB had already signed the SPA, given over a 10% deposit, paid salaries for SFI employees, and even back salaries of SFI employees that were owed by the previous employer.
All of a sudden, the new Warisan state government decided not to issue fresh timber licenses, with the excuse that PPSB did not fulfil a new set of previously unheard-of conditions. Not only that, GTC has brought in a new potential investor, China’s Lee & Man Paper, behind PPSB’s back. And as a result of all of this, the employees of SFI have been coming to work to a factory that has not been in operation for years, and have had their salaries delayed several times.
We would like to know how PPSB would be expected to fulfil conditions that did not exist when they signed the SPA? The new conditions are that PPSB has to JV with a pulp and paper specialist before the licenses will be issues. But how – and why – would any company agree to a billion dollar JV when the deal itself has not even gone through? PPSB has already spent over RM1 million just on the deposit and paying salaries of employees once they took on the responsibility of SFI. Imagine bringing another company in only to find that the deal falls through because of completely unjustifiable reasons. It doesn’t make sense for any company to enter such a sales agreement.
What if you paid the deposit for a car, put in fuel, and then was told after you had signed the ownership papers that someone else has decided that you can’t drive it. It makes no sense, and not only that, makes people question even going into business in Sabah.
At the same time, PPSB has already shown that it is a reliable paymaster for the people of Sipitang – and Sipitang’s economy relies greatly on the continued running of SFI. Most people in that area either work there or know someone who works there, and many restaurants and grocery stores rely on customers who are paid by SFI to survive.
The choice made by the Sabah state government and GTC not only throws a wrench into the business dealings of PPSB – and who knows how many other companies? – it also hurts the people of Sipitang. The Sabah government should stop making decisions based on whims and take the only just and fair step here.