KNM Group Berhad’s Director and CEO, Lee Swee Eng, along with Director Chew Fook Sin, have been found guilty by the Supreme Court of Indonesia of violating bankruptcy law in an attempt to harm creditors. The ruling stems from their actions as directors of former KNM subsidiaries PT. Heat Exchangers Indonesia (HEI) and PT. KPE Industries.
The court determined that Lee and Chew illegally transferred assets from an insolvent company using dubious internally generated related party agreements and transactions. KNM’s appeal against this decision was rejected in a Supreme Court ruling dated February 2016.
The Indonesian court ordered all illegally transferred assets and funds to be returned for the benefit of the creditors. However, questions remain about whether these assets were actually returned as ordered, who the affected creditors were, and what happened to the workforce and pension fund of the involved companies.
This legal trouble comes amid other challenges for KNM Group. The company has seen its share price tumble more than 90% from over RM1.00 in 2014 to less than RM0.10 in 2019, representing a significant loss for shareholders. Even with a recent rebound above RM0.30, many questions remain unanswered for those who have suffered losses.
Concerns have been raised about the lack of disclosure regarding these legal proceedings to KNM’s shareholders and the public. Critics question why the Bursa Malaysia has not taken action, as it did in 2011 when the company was fined for failing to make other material disclosures.
The involvement of Lee Swee Eng, his wife Gan Siew Liat, and Chew Fook Sin on KNM’s Board of Directors has also drawn scrutiny. Together, they appear to control about half of the board, raising questions about corporate governance and accountability.
This situation has led to speculation about potential legal action by shareholders against KNM Group for alleged deception. The company’s financial struggles have continued, with KNM recently being classified as a PN17 company (financially distressed) and defaulting on RM1.25 billion in loans and borrowings.
As KNM Group faces these challenges, the future remains uncertain for the company and its shareholders. The case highlights the importance of corporate transparency, strong governance, and regulatory oversight in protecting investor interests.
The full court appeal documents and the Supreme Court’s decision are available at the end of this story for those interested in reviewing the legal details of this case.
Download Supreme Court Decision
