Banking & Finance

SSER fined RM18 Mln for infringing BNM Conditions over Pipeline Projects

Date: 05 April 2019; Type: Legal News; Source: Bernama

KUALA LUMPUR, Apr 5 (Bernama) - Suria Strategic Energy Resources Sdn Bhd (SSER), a subsidiary of the Ministry of Finance which carried out two petrochemical and gas pipeline projects worth RM9.4 billion was today fined RM18 million by the Sessions Court here today for failing to comply with Bank Negara Malaysia (BNM) conditions.

Among the offences were that SSER had issued loan funds from The Export-Import Bank of China not based on the progress of the Multi-Product Pipeline (MPP) and Trans-Sabah Gas Pipeline (TSGP) projects and paid RM8.3 billion or 88 per cent of the cost of construction of RM9.4 billion for the two projects to the contractor , China Petroleum Pipeline Engineering Co Ltd (CPP) when work progress was only at 13 per cent.

Judge Manira Mohd Noor meted the sentence on SSER which was represented by Kishan Narendra Jasani (a representative appointed by the board of directors for the court case) after he pleaded guilty to six charges on behalf of the company as the accused.

In her judgement, Manira said the offence committed by SSER could give negative impact to the country’s public and economic interests and the punishment was a lesson to SSER and other companies not to commit the same offences.

SSER was fined RM3 million for each charge for a total fine of RM18 million.

When asked by the judge what is his post in the company, Kishan Narendra said he was only representing the company.

According to the first to the third charge, SSER was charged for failing to comply with conditions in the written approval dated April 13 2017 by BNM under Sub-section 214(2) of the Financial Services Act 2013 to acquire foreign currency loans from non-residents, for which SSER has issued loan funds from The Export-Import Bank of China not based on the progress of the Multi-Product Pipeline (MPP) project.

SSER also failed to ensure good and effective governance in managing the implementation of the MPP project as well as the failure to obtain the written approval of BNM for the change of information relating to the timeline for the implementation of MPP project.

For the fourth to the sixth charges, SSER was accused of the same charges which is the failure to comply with BNM conditions which was issuing loan funds from The Export-Import Bank of China not based on the project progress for the Trans-Sabah Gas Pipeline (TSGP) project and the failure to ensure good and effective governance in implementing TSGP project and the failure to obtain written approval from BNM for change of information relating to the implementation timeline of TSGP.

All the offences were carried at 9th floor, Menara 1 Dutamas, Solaris Dutamas, No. 1, Jalan Dutamas 1, here between April 2017 and May 2018 according to Subsection 214(9) of the same act which provides for a maximum of 10 years in jail or fine up to RM50 million or both.

Counsel Lawrence Tan Kim Kai appealed to the court for a minimum fine as it was the company's first offence and the company is now managed by a new management team.

BNM prosecution officer Nurdeenie Abdul Rashid however pressed the commensurating punishment over the seriousness of offences which led to a depreciation of the ringgit against other currencies.

MPP involves 600 km pipeline of various petrochemical projects from Melaka and Port Dickson, Negeri Sembilan to Jitra, Kedah at a cost of 4.53 billion yuan and RM2.53 billion or about RM5.35 billion.

TSGP is the construction of the 662-km of pipeline from Kimanis Gas Terminal to Sandakan and Tawau in Sabahat a cost of about RM4.04 billion.

On July 22 2016, SSER received Cabinet approval to implement the two projects worth RM9.4 billion and awarded them to the China Petroleum Pipeline Bureau (CPPB) on November 1 2016.

Both TSGP and MPP projects between SSER and CPP were terminated by the government on Sept 6 2018.

MY Bernama

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