Mudajaya probe finds possible irregularities in one project

PETALING JAYA: Mudajaya Group Bhd, which is keen to acquire 1Malaysia Development Bhd's (1MDB) power assets, said an investigation has found evidence to suggest, on a prima facie basis, that there have been breaches of duties and obligations and inappropriate conduct in one project.
"The findings of the investigation suggested that the irregular transactions were the conduct of a former employee and did not reveal any clear evidence of collaborated fraud," Mudajaya said in a filing with the stock exchange yesterday.
Mudajaya had on March 20, 2015 announced that an internal management working group had revealed an isolated case of irregular transactions in one project involving a former employee and had engaged forensic accountants KPMG to conduct a follow-through investigation. KPMG completed the investigation and submitted the report to the board yesterday.
The report also confirmed that all financial impact to the group had been adequately accounted for and no additional provisions are required to be made.
"The board had earlier lodged reports with the relevant authorities and will assess initiating legal proceedings where appropriate. The board has been advised to keep confidential the details of the report and the nature of such proceedings so as not to adversely affect the investigation by the relevant authorities," it added.
Meanwhile, Mudajaya executive director and deputy CEO Eric Lee Eng Leong said after its AGM yesterday that it is keen to acquire 1MDB's power assets.
"If the price is right, why not? We're interested to look into it. We're in (the) power (sector) for the long run," he told reporters after the company's AGM here.
The construction and power-based group, which is yet to approach 1MDB on the proposal, emphasised that it is on the lookout to buy power assets in a move to build its recurring income base.
"We're interested to grow the power business. All these are still in our internal discussion," said Lee.
1MDB owns three power assets, which are Powertek Energy Sdn Bhd, a 75% stake in the Kuala Langat Power Plant and a 75% stake in the coal-powered Jimah Energy. The plants are worth some RM10 billion, based on published reports.
Mudajaya is open to many permutations, whether via an acquisition, a joint venture or even refurbishment works.
Lee said the group, which has a gearing ratio of 0.1 times and RM120 million cash, has a RM1 billion sukuk programme to draw down from, of which some RM320 million has been issued.
"We can raise that, we can also do right placement and share issues. It's not something that is out of our reach. We have the capacity to do it (acquire 1MDB's power assets)," said Lee.
Mudajaya group managing director and CEO James Wong Tet Foh said it has built up to 18 power plants in Malaysia but so far the group does not own any power plants yet.
Besides Malaysia, Mudajaya is also interested to buy power assets in the region, in line with its plans to expand its footprint in the power sector in Asean.
The group is moving its focus from construction, which contributes the bulk of the group's revenue now, to the power sector, which is expected to generate higher profit margins.
Wong said contribution from the power division, which is less than 10% now, is expected to contribute at least half of the group's bottomline beyond 2016, overtaking its construction division.
For construction, it has submitted various tenders in excess of RM5 billion for civil, infrastructure and building works within the country. Its construction orderbook stood at RM900 million.