DNex said it filed the legal action against DNeX Telco Services Sdn Bhd’s (DTS) former CEO Mohd Ismail Khan Wazir Khan following an investigation arising from a whistleblower’s report it received alleging potential misconduct by the defendant relating to the acquisition of the remotely operated vehicle (ROV).
“The subsequent investigation by an independent third party appeared to substantiate the whistleblower’s allegations and upon consultation and advice from the company’s solicitors, the company has decided to initiate the legal action,” DNex said in a filing with Bursa Malaysia yesterday.
DNeX was replying to a query from the stock exchange regulator on the circumstances leading to the filing of the suit against Mohd Ismail in connection with the acquisition of the ROV, on Nov 15 at the Kuala Lumpur High Court.
The company said the legal action is not expected to have any significant financial and operational impact on the DNeX group. It also does not expect to incur any expected losses arising from the legal action.
DNeX was joined in the action by its subsidiaries DTS, Dagang Net Technologies Sdn Bhd, PT Dagang Samudera Hutama and PT DNeX Telco Indonesia.
Among the reliefs they are seeking are a declaration that the defendant had committed a breach of trust, and that he had breached his fiduciary duties as well as his duties of care, skill, diligence and fidelity towards the plaintiffs with regards to the acquisition of an ROV.
They are also seeking a declaration that Mohd Ismail holds the sum of US$1.34 million (RM6.1 million), all secret profits and other benefits he had obtained through the ROV acquisition on constructive trust for the plaintiffs.
In addition, they are also seeking special damages of US$1.25 million (RM5.69 million) and 23.76 billion rupiah (RM6.9 million), as well as aggravated and exemplary damages.
Mohd Ismail was instrumental in the business setup of DTS and its marine telecommunication cable installation project implementation in the Southeast Asian region.
It has not been a good week for DNeX. Yesterday, its shares hit limit down, falling as much 30 sen or nearly 40% in the afternoon session, before closing at 50.5 sen, down 25 sen or 33.11%. DNeX topped the most-active list on Bursa Malaysia with 300.33 million shares transacted yesterday.
Amid the heavy selling, Bursa Malaysia suspended the short selling of DNeX shares for the rest of the day under proprietary day trading (PDT) and intraday short selling (IDSS).
The board of DNeX also announced yesterday that its wholly-owned subsidiary DNeX Semiconductor Sdn Bhd (DNeX Semi) had issued and served a notice of arbitration to commence arbitration proceedings against Mimastronics Technologies Co Ltd.
Mimastronics is wholly owned by Tethystronics Technologies Co Ltd, a special purpose vehicle ultimately owned by Beijing Integrated Circuit Advanced Manufacturing and High-End Equipment Equity Investment Fund Center (Limited Partnership), which also held 40% equity interest in SilTerra Malaysia Sdn Bhd.
Kulim-based semiconductor wafer foundry SilTerra is a 60% owned subsidiary of DNeX Semi which in turn is a subsidiary of DNeX.
Khazanah Nasional Bhd sold then loss-making SilTerra to DNeX and the China-based equity fund for RM273 million cash in March last year.
The point of contention for the arbitration is whether prior approval is needed from the Ministry of International Trade and Industry (MITI) for the proposed investment.
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