KNM Group Berhad’s (KNM) Director and CEO, Lee Swee Eng (recently forced into retirement due to insider trading charges in Malaysia), and his in-law Director Chew Fook Sin (retired in May 2018), were both directors of the former Indonesian KNM subsidiary PT. Heat Exchangers Indonesia (HEI) along with PT. KPE Industries (another KNM subsidiary). They were found guilty by the Supreme Court of Indonesia of harming creditors by attempting to remove assets from a bankrupt company using dubious internally generated related party agreements and transactions.
KNM tried to appeal this decision but lost in a Supreme Court ruling dated February 2016.
The court has ordered that all assets and funds illegally transferred out of the company be returned for the benefit of the creditors. This raises many unanswered questions: Did those assets end up back in the hands of the creditors as ordered by the Supreme Court? Who were the creditors? What happened to the workforce and pension fund?
Actual court documents and decisions obtained directly from the Supreme Court can be downloaded at the bottom of this story.
In recent disclosures, Gan Siew Liat, wife of Lee Swee Eng, KNM Group Director, and chairman of the KNM Employee Stock Option Scheme (ESOS) committee, granted the majority of the KNM Group ESOS shares to herself and family members (an estimated 84% of the total ESOS shares), including those found guilty in this case:
- LEE SWEE ENG (HUSBAND charged with Insider Trading) 60,000,000 KNM Shares
- GAN SIEW LIAT (HERSELF) 40,000,000 KNM Shares
- SARA LEE MEI CHING (DAUGHTER) 25,000,000 Shares
- CHEW FOOK SIN (BROTHER-IN-LAW retired in May 2018) 18,000,000 Shares
- JUSTINE GAN HAI CHEING (COUSIN) 350,000
- WONG LAY FONG (COUSIN) 2,000,000
How is it that the current Board of Directors can justify the approval of awarding convicts for illegal behavior in this case? This case has incurred significant legal expenses and damaged KNM’s reputation. They should be personally held responsible for their illegal activities, not the shareholders of KNM. Clearly, they do not deserve millions in bonuses for breaking the law and damaging KNM.
Why is the wife of Lee Swee Eng (HR Manager and Executive Director Gan Siew Liat) allowed to decide what ESOS shares will be issued to whom? These shares are for high-performing employees of KNM, not for criminals and family members of Lee Swee Eng.
Even if she has the right or authority to issue ESOS KNM units to whomever she wants, how can she take from the workforce and give them to herself? Where do shareholders and employees draw the line at moral wrongdoing? This is a moral crime against the employees who sacrifice earnings and shareholders who are diluted by the Lee Swee Eng family’s personal greedy needs.
Keep in mind, the Lee Swee Eng family only owns directly or indirectly 10% of the outstanding shares of KNM, yet somehow controls the KNM Board of Directors. How can the Board of Directors justify rewarding criminal behavior for a 10% shareholder? What about the other 90% of the shareholders?
We continue to explore how this information was covered up and the impact it has had on KNM Group Berhad shareholders. There is a clear lack of confidence in the Lee Swee Eng family, and the share price reflects it.
In early 2021, the board of directors was shaken up, and long-time KNM outside lawyer Md Rizal Bahari Bin Md Noor (resigned in May 2021) replaced Lee Swee Eng when he was forced into retirement due to insider trading charges. Although in retirement, insiders say Lee Swee Eng still has a hand in the management of the company and often attends meetings as an outside consultant. What possible reason would the board of directors of KNM Group Berhad have for needing advice from a former Group CEO charged with insider trading? He and his family cannot be trusted with inside knowledge of KNM’s activities.
Under the management of CEO Lee Swee Eng, the share price has tumbled more than 90% from over RM1.00 in 2014 to less than RM0.10 in 2019. The price at the time of writing this story is RM0.16—a huge loss for so many.
The KNM Group Berhad shareholders have been disadvantaged without the knowledge of the illegal activities of its current CEO Lee Swee Eng and his KNM cohorts by continuing to support unknowingly the illegal activities of KNM Group Berhad directors. It is likely the shareholder elections would have gone much differently if the shareholders were properly informed.
The AGM for KNM is dated 29 June 2021. Four of the directors that control the KNM Board, including Lee Swee Eng’s HR manager and wife Gan Siew Liat, are up for re-election. Many shareholders say it is unlikely Gan Siew Liat will be re-elected.
Following the AGM is the EGM on the same day to approve a private placement that would dilute the existing shareholders by 30% in share value. This private placement is only offered to select investors, including 50% to Gan Siew Liat and other insider investors who support the Lee Swee Eng family. Minority shareholders and traders have already banded together to try and stop this proposal from being approved.
Shareholders must join together to oppose this EGM private placement proposal and block the AGM re-election of Gan Siew Liat. A call for a formal forensic investigation of the Lee Swee Eng family and its past activities is necessary. The company should consider whether the activities of these directors were harmful to the company and its shareholders and take appropriate actions to recover its losses on behalf of the many shareholders who have lost money.
Download Supreme Court Decision
