IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION) civiL suit No: OF 2010 BETWEEN SIME DARBY BERHAD. SIME DARBY ENGINEERING SDN BHD. SIME DARBY ENERGY SDN BHD SIME DARBY MARINE SDN BHD. SIME DARBY MARINE (HONG KONG) PTE. LTD. PLAINTIFFS. AND DATO" SERI AHMAD ZUBAIR @ AHMAD ZUBIR BIN HJ MURSHID DATO MOHAMAD SHUKRI BIN BAHAROM ABDUL RAHIM BIN ISMAIL ABDUL KADIR ALIAS MOHD. ZAKI BIN OTHMAN DEFENDANTSCONTENTS A. PARTIES (Plaintiffs (i) Defendants 8. QATAR PETROLEUM PROJECT (Background (i) The Bid for the AP Project (il) Entering into the QP Contract knowing that QP had rejected IOEC as the T & | sub- contractor and failing to make alternative appointment (iv) Failure to Properly DocumentRecord QP's alleged promises to compensate Sime Darby Engineering (¥) Deliberate withholding or concealment of critleal information (vi) Manipulation and Deliberate Concealment of Information in relation to cost overrun (vii) Wrongful appointment of Consultants (vii) Incompetent Implementation of the QP Project Pages 5-6 6-18 17-19 19-23 24 24-26 26-29 20-33 33-38 38-39c. a Ww iit) ww) o wi (wiy wit) ww Co) «xi (xii) xii) MAERSK OIL QATAR PROJECT Background Beyond the Competence or Capacity of Sime Darby Engineering to property carry out and complete the MOQ Project within time Appointment of RNZ Integrated (M) Sda Bhd as Designers for the MOQ Project Waiver of RN2's Performance Bond Incomplete and Poor Quality Design by RNZ Zero-Zero Settlement between Sime Darby Engineering and RNZ Release of Retention and other Monies to RNZ Dishonest Misrepresentation made by Shukri as to RNZ Transportation and Installation Construetion Hook-up and Commissioning Incompetent Choice of Sub-Contractors Consultants 40-42 43-44 45-46 46-47 47-48 48-49 49-51 51-82 52-58 56-87 87 58-50 59-62a w Gi) ww wi) vi) wit ww) 3) ow cxit) exit) PROJECT MARINE Background Shukri's proposal to construct DLB and AHTS Gross Negligence of Shukri and Zubir in not recommending outright purchase of DLB and AHTS No due diligence on MLC Group Misrepresentation of KPMG's financial due diligence reports to the Sime Darby Board Appointment of MLC grossly negligent Misrepresentation in the Board Paper concerning MLC's track record Non-disclosure that actual construction of 3 vessels would be carried out by sub- contractors, and not by MLC Plethora of Contracts Changes unfavourable to Sime Marine authorized by Shukri to be Included in Shipbuilding Agreements dated 25!" April 2008 Waiver of Conditions Precedent and Payment Clause in the Shipbuilding Agreements Waiver of the Bank Guarantee for the 3" to 5** instalment Payments for DLB 12888 Non-Delivery of 3 Vessels RELIEF 63 64 67 69 76 78 79 a a3 86 a1 92 64 67 68 16 ” 79 20 83 86 87 at 92 93STATEMENT OF CLAIM A. PARTIES 0 The 1" Plaintiff ("Sime Darby”) is a public company incorporated under the laws of Malaysia whose shares are listed for trading on Burea Malaysia Berhad. in November 2007, Kumpulan Sime Darby Berhad ("KSD"), Golden Hope Plantations Berhad and Kumpulan Guthrie Berhad merged to form Sime Darby. Sime Darby is a diversified multi-national carrying on business in Malaysia, and some 20 other countries. Its core businesses are plantation, property, industrial, motors, energy and utilities and healthcare. Sime Darby is the ultimate holding company of the entire Sime Group of Companies (“the Sime Group") which comprises some 560 companies as at 30.9.2010, ‘The 2° Plaintiff (“Sime Darby Engines ing”) is @ private limited company incorporated under the laws of Malaysia It is @ wholly-owned subsidiary of Sime Darby. Sime Darby Engineering is a member of the Sime Group of Companies. It Is part of the group of companies within the Energy & Utilities Division (“E&U Division”) and provides engineering, procurement, construction, installation,6 hook-up and commissioning services relating to the oil and gas industry The 3" Plaintiff (“Sime Energy”) is a private limited company incorporated under the laws of Malaysia, It is a wholly-owned subsidiary of Sime Darby and a member of the Sime Group. It is part of the group of companies within the E&U Division and an investment holding company, which provides operating and maintenance services to an independent power producer. The 4 Plaintiff (“Sime Marine") is @ private limited company incorporated under the laws of Malaysia. It is a wholly-owned subsidiary of Sime Darby and a member of the Sime Group. ‘The 5" Plaintiff (“Sime Marine (HK)") Is a private limited company incorporated under the laws of Hong Kong. It is @ wholly-owned subsidiary of Sime Darby and a member of the Sime Group. It is an Investment holding company. (ii) Defendants The 1* Defendant (*Zubir") was the President and Group Chief Executive of the Sime Group and a member of the Board of Directors of Sime Darby. He was at all material times a full-time working director, pursuant to a ServiceContract, the Sime Group. 7 He occupied the highest executive position in Insofar as relevant in these proceedings, Zubir was a member of the following boards or committees in the Sime Group: 0} September 2007 ~ May 2010 Board of Directors ("BOD") of Sime Darby. “iy dune 2004 - November 2006 Executive Committee of KSD. Gi) August 2004 November 2007 Risk Management Committee of Ksp. November 2008 (iv) |January 2008 =| Group Management Commitee May 2010 of Sime Darby. () |June 2004 -|B80D of Sime Engineering Services Bhd.8 wo August 2004 March 2006 Executive Committee of Sime Engi ng Services Bhd. (wii) | October 2000 -|Group Management Committee November 2007 | of KSD (wii) |June 2004 ~ | BOD of KSD October 2010 (2 [January 2006 -|B0D of Sime Darby Energy & October 2006 | utilities San Bha (0) |march 2008 -|Executive Committee of Sime October 2006 | Darby Energy & Utilities Sdn Bhd. (xi) |June 2004 -| BOD of Sime Engineering March 2005 (xi) | February 2007 ~ | Supervisory Committee of E & U May 2010 Division.{ a In holding these senior positions at the apex of the leadership of the Sime Group, Zubir owed the following duties to Sime Darby and to all the members of the Sime. Group:- ()— toact in their best interest; (ii) to act honestly and in good faith and fidelity; (ii) to perform his duties with reasonable care, reasonable competence and skill (v) not to act negligently; () to perform his duties in accordance with the instructions and directions of the Board of Directors of Sime Darby (vi) to disclose to the Board of Directors of Sime Darby the misconduct or breaches of duty of other employees, including those reporting to him or over whom he has responsibility;10 (vii) to supervise his subordinates, including those (wit 10. "1 () employees reporting directly to him to ensure that they discharge their duties loyally and faithfully and in the best interests of Sime Darby andior members of the Sime Group: to avoid any conflict of his personal interests with duties owed to the Sime Group; and to exercise powers for the purposes for which they were conferred As a very senior officer (and as group chief executive officer), Zubir was in a fiduciary relationship with the Sime Group and in consequence, owed a fiduciary duty to the Sime Group. As a very senior officer (, and as group chief executive officer) of the Sime Group, Zubir was @ trustee of the assets and properties of the Sime Group. ‘The 2" Defendant ("Shukri") was at all material times the Executive Vice President of the E & U Division of the Sime Group, thereby occupying the highest executive position in that Division.12. Insofar as relevant in these proceeding 11 Shukri was a member of the following boards or committees:- ()) | January 2008 - | Group Management Committee of March 2010 Sime Darby. i) | October 2004-] — Management Team of KSD. November 2007 (iii) | October 2004-| BOD of Sime Engineering. February 2010 (iv) [November 2004] BOD of Sime Engin: = March 2010 Services Bhd. (W) | November 2004 | BOD of Sime Darby Energy Sdn February 2010 Bhd (vi) [November 2004 | Executive Committee of Sime = March 2006 | Engineering Services Bhd, (wit) | November 2004 | Management Team of Sime -November 2007 | Engineering Services Bhd. (itt) | January 2006 - | BOD of Sime Darby Energy & October 2007 Utilities Sdn Bhs. (ie) March 2006 — Executive Committee of Sime13. 12 October 2008] Darby Energy & Ulilties Sdn Bhd (x) | October 2004 - | BOD of Sime Darby Engineering. February 2010 (xi) | November 2004 BOD of Sime Marine ~ February 2010 (xit) | Apri 2008 - BOD of Sime Marine (HK). January 2010 (xitt) | August 2008 - | BOD of Sime Darby Marine Puteri | February 2010 | offshore 1 (L) Inc. (*SDMPO I") (xiv) | August 2008 - | BOD of Sime Darby Marine Puteri February 2010 | Offshore Il (L) Inc. (“SDMPO II") (xv) | August 2008 - | BOD of Sime Darby Marine Puteri February 2010 | Offshore III (L) Inc. (*SOMPO III") At all material times in holding these very senior positions at the apex of the leadership of the E & U Division of the Sime Group, Shukri owed the same duties and was in the same relationship to the Sime Group as pleaded in Paragraphs & to 10 above. Within the corporate structure13 of the Sime Group, Shukri’s immediate superior was Zubir and Shukri reported directly to him. - 14. The 3" Defendant (“Rahim”) was at all material times the Chief Financial Officer of the E & U Division of the Sime Group. By virtue of his position, he was the most senior officer in the E & U Division in all financial matters. 15. Insofar as relevant in these proceedings, Rahim was a member of the following boards and committees in the Sime Group:- | 2008 - 2009 BOD of Sime Engineering - (ii) | 2007 - February BOD of Sime Energy. C 2010 2005 - 2008 | Management Team of Sime [ Engineering Services Bhd. | tiv) | 2007 - August BOD of Sime Darby | 2010 Engineering | - (w) | December 2005 BOD of Sime Marine. i ~ August 2010 (w) | Apri 2008 | BOD of Sime Marine (HK). August 201016. 17. 14 (vii) | August 2008 - BOD of SOMPO | December 2010 {viil) | August 2008 ~ BOD of SOMPO II December 2010 (ix) | August 2008 ~ BOD of SDMPO IIT December 2010 ‘At all material times in holding these very senior positions at the apex of the leadership of the E & U Division of the Sime Group, Rahim owed the same duties and was in the same relationship to the Sime Group as pleaded in Paragraphs 8 to 10 above. The 4" Defendant (“Kadir*) was at all material times the Head of Oil and Gas in the E & U Division, He was also the Chief Executive Officer of SOMPO |, SDMPO II and SDMPO III until February 2010. Kadir was transferred to the position of Senior General Manager, Business Recovery, E & U Division with effect from August 2010.18 16. 15 Insofar as relevant in these proceedings, Kadir was a member of the following boards and committees in the Sime Group:- aw 2007 - February 2010 BOD of Simo Energy. August 2010 (ii) | 2007 ~ August | 80D of Sime Darby Engineering. 2010 (ii) | 2007 ~ August | 800 of Sime Marine. 2010 (iy | Apri 2008 ~ | BOD of Sime Marine (HK), At all material times in holding these senior positions at the apex of the leadership of the E & U Division of the Sime Group, Kadir owed the same duties and was in the relationship to the Sime Group as pleaded in Paragraphs 8 to 10 above,20. 24 22 16 The 6!" Defendant Zaki") is the Senior General Manager of Sime Darby Engineering since July 2008, thereby being the most senior officer in charge of day to day affairs in that company, @ member of the E & U Division ‘At all material times in holding @ senior position at the apex of the leadership of the E & U Division of the Sime Group, Zaki owed the same duties and was in the same relationship to the Sime Group as pleaded in Paragraphs 8 to 10 above. The Plaintiffs contend that the Defendants collectively constituted the decisfon-making unit in the E & U Division of the Sime Group, which was responsible for the actions ‘and omissions of the € & U Division, In consequence, each of the Defendants is liable for the losses and damages suffered by the E & U Division as pleaded hereinatter,23 24, 17 B. QATAR PETROLEUM PROJECT (i) Background In or about 2005, the Senior Management of Sime Darby Engineering decided to extend its operations and to work fn projects in the Middle East. Pursuant to that decision, Sime Darby Engineering decided to bid for an Engineering, Procurement, Construction, Installation and Commissioning (EPIC) contract to be commissioned by Qatar Petroleum AS (“QP*) for its Bulhanine ("BH") Project of the BH-DOS, BH-MO4 and BH-103 well head jackets, topsides, pipelines, tie-ins and miscellaneous flow lines in the BH and MM fields offshore, along with topsides modifications ("QP Project”). The full scope of the QP Project entailed the engineering, procuring, constructing, installing and commissioning of the following: () New well-nead platform (jackets and topsides); (ii) Modifications to 34 existing platforms: (il) 17. sub-sea pipeline between existing and new platforms;25. 26. 18 (iv) Umbilical connections at various pipelines; and (v) Modifications of 5 existing pipelines to cater for new junctions. A substantial proportion of the project involved transport and installation (“T&I"). Sime Darby Engineering had no prior experience in undertaking a project of this scale and magnitude. It was the first EPCIC contract that Sime Darby Engineering would undertake outside Malaysia. It was also the first major international project that Sime Darby Engineering would work as the main contractor. Sime Darby Engineering also did not possess any marine capabilities to undertake the TA work, In 2006 and 2006, Shukri was the Managing Director of Sime Engin ing Services Berhad. At that material time, Sime Darby Engineering was a subsidiary of Sime Engineering Services Berhad, through Sime Darby Oil & Gas Sdn Bhd. Shukri was also a member of the Board of Directors, Executive Committee and Management Team of Sime Engineering Services Berhad and @ divisional Girector of the Engineering, Oil and Gas division. Together with him on the Management Team of Sime Engineering27. 28. 19 Services Berhad was Rahim, Rahim was also the Chief Financial Officer. Zaki was the General Manager of Sime Darby Engineering. ‘At all material times from 2007, the Board of Directors of Sime Darby Engineering comprised Shukri, Rahim and Kadir. Shukri was the Managing Director, while Rahim was the Chief Financial Officer. Kadir was General Manager (Corporate Strategy) while Zaki wes General Manager (Operations). Accordingly, the highest executive positions in Sime Darby Engineering at all material times were occupied by Shukri, Rehim, Kadir and Zaki. Shukri repo: d directly to Zubir. They took all the major decisions concerning the QP Project. Accordingly, each of the Defendants is personally cesponsible for the actions and omissions of Sime Darby Engineering in the QP Project, which have resulted in loss and damage to it, as hereinafter pleaded. (ii) The Bid for the OP Project Sime Darby Engineering did not have any marine capabilities for the T & | work. In order to prepare for the bid, Sime Darby Engineering invited tenders from T & | subcontractors in September/October 2005, but only one quotation for the entire scope of T & | work was received.29. 20 The quotation was from Iran Offshore Engineering Company (“IOEC*), an agency of the Government of Iran. Having regard to the sanctions imposed by the Government of the United States of Ami ica against the Government of Iran in the wake of 9/11 and that the Government of Qatar is a close ally of the United States, (which were matters of public knowledge) the appointment of an Iranian agency was wholly inappropriate and reckless and against the interests of Sime Darby Engineering, By a Clearance for Bid dated 10" August 2005, Zaki submitted a recommendation to the Board of Directors of Sime Darby Engineering and Sime Engineering Sorvicos Berhad to put in a bid for the EPCIC contract in the OP, Project with an estimated contract value of USS200 million. Shukri, amongst others, had signed the Clearance for Bid dated 10 August 2005 (In his capacity as Managing Director of Sime Engineering Services Berhad). ‘Among the significant risks Identified by Zaki in that document were:- () that Sime Darby Engineering has no track record on T & 1 and pipe laying work;24 (ii) any delay of the installation work will lead to the delay of hooking and commissioning work which will lead to a delay in completion; (i) that Sime Darby Engineering is not familiar with the yard, local labour rates and facilities in Qatar; and liv) that Sime Darby Engineering is faced with potential risks as this is an EPCIC scope as compared to the conventional and traditional fabrication scope. On or about 10th November 2005, Sime Daray Engineering nominated 1OEC as the T & | sub-contractor in its tender propessl, which was submitted at the same time (10th November 2005) to QP, with a contract price of QR799 ). million (RMB47 mill While Sime Darby Engineering's tender was being considered, by letter dated 26" January 2006, QP Informed Sime Darby Engineering that feedback on 1OEC. from previous projects in Qatar had not been positive, and instructed Sime Darby Engineering to provide justification for using IOEC. This was followed by a meeting between Zaki and QP in Qatar in February 2008 where QP raised some concerns that IOEC could not perform the T & | works and QP asked for alternative T & | sub-contractors.cm 32. 33. a4 36. 22 ‘ebruary 2006, Sime Darby Engineering By letter dated 7" informed QP that it was negotiating with Saipem Mediterranean Service a8 an alternative T & | sub- contractor. By letter dated 8 March 2006, QP informed Sime Darby Engineering that IOEC was not acceptable as the T & | sub-contractor for the QP project. In oF about 18% March 2008, Sime Darby Engineering proposed 3 T & I sub-contractors: Horizon, Global Offshore International Ltd ("Global") and Saipem Mediterranean Service (*Saipem), none of which was accepted by QP. Sime Darby Engineering had also submitted @ revised tender proposal for the sum of QR945,885,000. The Bid Summary Sheet for the revised tender proposal was signed by, amongst others, Zubir (in his capacity as Group Chief Executive Officer), Shukri (in his capacity as Managing Director of Sime Engineering Services Berhad) and Rahim (in his capacity as Chief Financiat Officer of Sime Engineering Services Berhad) ‘On 12" April 2008, QP issued the Letter of Acceptance to ‘Sime Darby Engineering, thereby signifying that its bid in the sum of QR945,885,000.00 had been successful, with completion scheduled for 15! August 2008, that is, within 28 months. It was a lump sum contract. The EPCICma 36 23 contract in the QP Project was signed by Zaki on behalf of ‘Sime Darby Engineering on 27 September 2006, and had an effective date of 15 April 2006, Having actual knowledge of:~ (the significant risks surrounding the QP Project (as, pleaded in Paragraph 29 abov (ii) the rejection by QP of Sime’s nominee, IOEC, as the T & | sub-contractor; (il) the impact of the T & I work on the entire QP project in that it represented more than 60% of the budget; and (iv) the lack of an alternative T & | sub-contractor, ‘each of the Defendants acted in gross negligence in not withdrawing the bid submitted by Sime Darby Engineering on 10% November 2005 and/or continuing with the bid process, on the ground that Sime Darby Engineering was not in a position to perform properly or to complete the EPCIC contract within time, and therefore should not seek24 (iil) Entering into the QP contract knowing that QP had rojected JOEC as the T & | sub-contractor and failing to make { alternative appointment 37. The Pleintfe repent the matiere pleaded in Paragraphs [ 28-- 96 above, I wae eccordngly foreseeable that the tslocton of ]OEC by QP and Sime Darby Engineering's inability to obtain a replacement & | subcontractor [ would result in infor fia” cost overrun, lengthy delays in completing the QP project and the resulting Havieied damages. In such circumstances, each ofthe Defendants acted in grove nesigonee in commiting Sine Darey Enginosring to a contact when tho latter was inno position to perform properly oe complat within time. tr consequence, each of the Defandants 8 Hable to Sime Darby Engineaing for the losses and damace It has suffored by reason of entering into tho EPIC Contract fr the QP project. 2 (iv) Failure to Properly Document/Record QP’s alleged promises to compensate Sime Darby Engineering 38. Shukri and Zaki repeatedly reported to Sime Darby Engineering and the relevant boards and committees that representatives of QP had allegedly made verbal promises to them, “inter alia”~«i ity to compensate Sime Darby Engineering for all costs and expenses incurred by QP's rejection of IOEC as the T & 1 sub-contractor to approve and pay Variation Orders submitted by Sime Darby Engineering; and that QP will not make any liquidated damages claim against Sime Darby Engineering Shukrl and Zaki did not take any steps to put in writing any of the alleged verbal promises to the detriment of Sime Darby Engineering “0 “) PARTICULARS, In October 2006, Shukri and Zaki attended a meeting with representatives of QP when representatives of the latter allegedly informed them (Shukri and Zaki) that any costs ineurred by Sime Darby Engineering as a result of OP's rejection of 1OEC would be compensated by OP. After Sime Darby Engineering had submitted its first Variation Order claim dated 31% May 2008 in the sum of QR752,480,517, Shukri and Zeki met QP's38 40 26 representative over several meetings who Informed them (Shukri and Zaki) that Sime Darby Engineering should complete the project, hand-over the details of the costs and QP would start to pay them; and (ili) Shukri had represented to the Supervisory Committee of the E&U Division that QP had verbally approved claims of RM480 million. Apart from not securing any written confirmation from QP fon any of these matters, neither Shukri nor Zaki recorded the verbal promises allegedly made on behalf of QP, whether by way of letter, fax or e-mail. In so failing to take the elementary step of confirming in writing the said promises (if actually made on behalf of QP) Shukri and Zaki acted in gross negligence and to the detriment of Sime Darby Engineering which has been deprived of contemporaneous proof or evidence of such promises Such omission has resulted in Sime Darby Engineering suffering loss or damage, which the Plaintiffs contend Shukti and Zaki are liable in law to make good. w withholding or concealment of critical formati Shukri deliberately and wilfully withheld or concealed critical information which he perceived as negative or27 gave false information to relevant bodies in the Sime Group, including the Boards of Directors Sime Darby and Sime Darby Engineering, 80 as not to endanger the securing and continuation of the QP project “0 “ ca) PARTICULARS Misleading the Audit Committee and the Board of Directors of Sime Darby Engineering Services Berhad and the Group Management Committee of Sime Darby during mestings held in September and November 2006 by falsely reporting that the problem of the replacement T &:1 sub-contractor had been resolved, when he knew it had not: Making contradictory or misleading representations to the Audit Committee of Sime Darby Engineering Services Berhad and the Board of Directors of Sime Darby and Sime Darby Engineering Services Berhad in 2006 and 2007, as to the delay in the design and engineering aspects of the QP Project; and Concealing issues of delay, anticipated losses and the danger of QP making liquidated damages claim during meetings of the Supervisory Committee of the4 42 28 12 Division held on 25" February and Energy & util 28" March 2008. In 80 acting, Shukri intended to cover-up the manifold problems that dogged the QP Project from its inception and to keep the Board of Directors of Sime Darby (as the highest decision-making body in the Sime's Group management hierarchy) in the dark. By such conduct, Shukri acted in breach’ of the duties that he owed to the ‘Sime Group (as pleaded in Paragraphs & to 10 above). Zubir knew or ought to have known that Shukri had not been truthful in his (Shukri's) reporting on matters pertaining to tho QP project. Relevant correspancence between Sime Darby Engineering and OP that took place ie Aprit 2007 were copied to Zubir, thereby giving him actual knowledge of the problems. Further, Zubir had also attended Consultative Committee meetings of the Energy & Utilities Division held on 12 March 2007 and 3" August 2007 and was therefore aware of the issues of delay in relation to Project QP raised in the sal meetings. However, Zubir never highlighted or fully explained these problems at meetings of:- ()—_ Board of Directors of Sime Darby; (i) Group Management Committee of Sime Darby;m—-omnrmr e eee 43 44 46 29 (il) Supervisory Committee of the E&U Division. In consequence, Zubir acted in breach of the duties specified in Paragraphs 8 to 10 above. (vi) Manipulation and Deliberate Concealment of Information in relation to cost overrun The budgeted prime cost for the QP project was RM867,879,978.00. As at May 2010, total cost had ballooned to RM1,664,000,846.00, that is, a cost overrun of RM796,120,868.00. AL all material times, contractual matters relating to the QP Project were handled in Sime Darby Engineering by Anbazagan AG Raju, the Head of Contracting Service. He reported to Zaki, as General Manager (Operations). Financial matters pertaining to the QP project were dealt with in Sime Darby Engineering by Venkidasicum Thirumalai, the Manager (Project Accounting) who reported to his immediate superior Sia Kia Tiong, the General Manager of Finance and Accounting, who reported to both Rahim as Chief Financial Officer and to Shukri as Managing Director.48. 47. “ 30 ‘The Plaintiffs contend that in all matters pertaining to the QP Project, the officers junior to Zaki (the sald ‘Anbazagan) and to Shukri and Rahim (the said Sia and Venki) acted on the diroction and orders of their superior officers, Shukri, Rahim and Zaki. The latter wore the highest executives who jointly or severally took the decisions relating to the QP Project, which are the subject matter of this action, In consequence, each of them is liable for the losses and damages suffered by Sime Darby Engineering by reason of their actions and omissions In order to hide the truth about the cost overrun in the QP Project, Shukri, Kadir, Rahim and Zaki were responsible for manipulating and/or concocting information, including giving instructions to their junior officer to do so PARTICULARS in or about 17 January 2009, Zaki directed Anbazagan to persuade QPs engineering manager to Issue a false letter or to agree to Include in the minutes of a Senior Management meeting, false Information that QP would consider favourably Sime Darby Engineering's claim, on the basis that Sime Darby Engineering would not use such false«i, (iit) Ww) 31 evidence against QP if the latter decides not to approve and settle Sime Darby Engineering's claim In or about 17* January 2000, Anbazagan, with Zaki's knowledge and/or approval, concealed a letter addressed to QP's engineering manager by stating that - “this letter Is @ highly confidential letter and should hot be in the project flies, hence, | am not using any letter reference number, or else, auditors may be searching for the letter if they see this in the log book.” In or about 21% December 2009, Zaki and Anbazagan collaborated to conceal the said fabricated minutes of Senior Management meeting from Choo Suit Mae, the Group Head of Legal Department of Sime Darby. on the direction of Shukri and/or Rahim, Sia, Venki and Anbazagan collaborated ‘inter alia” by e-mail messages of 15" June and 16 June 2009, to improperly reduce the actual cost overrun sums andlor deliberately delay the recognition of the true extent of the costs incurred in the QP Project, in order to falsely show in the books and records of Sime Darby Engineering:” wo (wi) 32 1, that profits had been made; 2. they had stayed within the cost provision; or 3. to create an impression that the issue of cost was not as serious as it actually was. thus, the forecast costs were adjusted, recorded and reported on a monthly incremental basis to falsely show an overstatement of profit in Sime Darby Engineering's monthly management account; on the instruction of Shukri, Rahim and/or Zeki, Sia, Venki and Anbazagan, amongst others, had collaborated to manipulate figures in the MOQ Project to show @ more “positive” picture of Sime Darby Engineering's financial performance andlor to conceal and to cover-up cost overruns in the QP Project. In this regard, the reported cost savings for Project MOQ as at June 2008 was an inflated sum of RM200 million; and at the instruction of Shukri, Zaki and/or Rahim, 2 sets of Project Progress Reports were maintained by Sime Darby Engineering: one truthful and one false (to recognize a higher revenue).33 48. In causing or directing the books, records and documents maintained by Sime Darby Engineering to slate false or untruthful information so as to cover-up the true cost overrun incurred in the QP Project, Shukri, Rahim, Kadir and Zaki acted dishonestly, and in breach of the duties pleaded in Paragraphs 8 to 10 above (vii) Wronaful appointment of Consultants, 49, The Defendants caused Sime Darby Engineering to appoint 7 external consultants to advise on the QP. Project. Their functions can be divided into 3 categorles:- () Local Sponsor; (ii) Project Securing Agents; and (ili) Project Claims Agents. Table A on the next page (Page 34) give details of the services they were to provide and the fees they charged and were paid The total sum paid to the consultants amounted to RM102,077,746.0034 ore'uo'tor PAVEOn ‘oponia69 gap, pefud unojonag sued oN, ans dam sou ay 41 | dd 2p rods supp amass ot | paused t foamnseo2 opioid poe fou | pya ups PumnsHe) 00's tans deri | opocoasi wu | sooe foyer | uo oy Tesade sure airs sso 2 Seung pomp | TT Bunsse) 1 Sxqer om ul URE ‘oqo stuns. tung éow1 | coouos'tasn | soocwerre | pur soonies soumnsue> opsnig saree H sexta pre sanyo sung, apaead 0 pw sono! po abur a ony Baeua | TT vO Sup, uy eer __|oenmo50 90's | severcwvd| sooc dew ye [ous 1 ssume opnoeg | reconewmnn ye | sum seoug |» smn ‘oq 1 wee pov swowoiand pa mets Seysousus | euogeuut wevsve | pemooy isc | scruse'ecuvd | _g00e sn ge | 1) sms foumasioo so usd pod oH a ssid ad 91048 suey paves | Suumang esewisty | wenwooso wos | oscrecur avo | _sooe enor somos sae sesoud | orm oy tessoe'1c__| wemooyo sz | crves'ceuvd| seve toy aupeazeueary | soseds owt | aw) auwoorsavn | sass saya againous suxmava | ao sisva samz__| aawinroaay ag ou saptanas SINVIMSNOO | sNotLoNnA | “ON. on w Vaqavi [en60 51 52 35 The Plaintiffs contend that save for Almana Trading Co W.L.L., there were no objective grounds for appointing the rest of the consultants, none of whom added value to the sorvices that the Sime Group could offer to the securing and proper implementation of the QP Project. The said appointments were unauthorised. Further, in specialized areas of the project over which Sime Darby Engineering did not have the necessary expertise, sub-contractors were in fact appointed Further, the Plaintiffs contend that some of the said consultants were offering services which may not have been lawful under the laws of Malaysia. In consequence, the Defendants who directed the appointment of the eaid consultants may have caused Sime Darby Engineering to act contrary to the law and caused reputational damage to Sime Darby Engineering Having regard to the magnitude of the consultancy foes (that is, exceeding RM102 million), the Plaintifis contend that approval for the same must have been granted by Shuksl, with Rahim, Kadir and Zaki acting to implement the directions of the former. Thus, each of the said Defendants had actual knowledge of the role of the said consultants in the QP Project53 54 565, 36 In so acting, each of the Defendants was not only in breach of the duties pleaded in Paragraphs 8 to 10 above but also acted dishonestly and contrary to the laws of Malaysia. By reason of their actions, Sime Darby Engineering has needlessly and without justification paid out the said sum of RM80,510,755.00 which the Plaintiffs seek recovery from the Defendants. The Defendants caused the payment by Sime Darby Engineering of QR47,294,250, purportedly due to Intraline Resources Sdn Bhd (“Intraline”) for alleged consultancy services, to another entity Oriental Enterprise WL (Orlental"). A further sum of 2.5% of the value of the contract that was due and payable to Intraline was in fact paid by Sime Darby Engineering to yet another entity, Hero Epoch International Ltd., (“Hero Epoch")-a company incorporated in the British Virgin Isles. The Defendants caused the payment by Sime Darby Engineering of RMS million to Incobliss Consultancy Sdn Bhé (“Incobliss”) within 3 days of the execution of @ Consultancy Service Agreement between Sime Darby Engineering and Incobliss on 18! August 2008 in circumstances where Incobliss had not performed any56. 87, 58. 58 37 service for Sime Darby Engineering. Hence, it was @ payment made without consideration Kadir instructed his junior, Anbazagan, to conceal the engagement of Incobliss from Sime Darby Engineering's external auditors and/or to concoct an explanation to mollify the auditors. During an interview in or about August 2010, Zaki admitted:- “incobliss was the entity used to streamline this proc faciliteting payments to agents to lobby/secure projects the RMS million was paid to the Engineering Manager of ap. The Defendants caused Sime Darby Engineering to pay, USD1,600,000 to Wasesla for Technology LLC (Waseela") and RM4,641,721 to Halani_ International Trading Co. LLC (“Halani*), in circumstances where no services were rendered by Waseela and Halani respectively to Sime Darby Engineering The Plaintiffs accordingly contend that the Defendants were reckless in managing the financial affairs of Sime Darby Engineering in not caring whether any services had60. et 38 beon performed by Intraline, Hero Epoch, incobliss, Halani or Waseela as pleaded in Paragraphs 54 to 58 above, which would justify payments or that third parties wore in fact the actual recipients of such fees. By so acting, the Defendants acted in breach of the duties pleaded in Paragraphs 8 to 10 above (viti) Incompetent Implementation of the QP Project As pleaded in Paragraph 44 above, the total cost for the QP Project had escalated to RM1,664,000,848.00, that Is, ‘a mammoth cost overrun of RM796,120,868.00. The Plaintiffs contend that in directing, supervising, carrying out or implementing the QP Project, each of the Defendants acted incompetently, without any reasonable skill and in gross negligence. Further, Zubir and Shukri acted in breach of their duty in failing to present the full facts of the Project truthfully and timeously to the Board of Directors of Sime Darby thereby iving the Board an opportunity to decide on the future of the project. Thus, after becoming aware by September 2006 that Sime Darby Engineering was facing great difficulty in nominating @ suitable T & | sub-contractor with experience and acceptable to QP (after QP had62 39 rejected 10EC), which had the inevitable result of delaying completion, thereby increasing cost, Zubir and ‘Shukri acted in breach of their duties by falling to advise the Board of Directors of Sime Darby to seriously consider the option of “cutting their losses" Instead, Zubir and Shukri (together with the other Defendants) acted in a surreptitious manner to keep the project alive which resulted in not only Sime Darby Engineering not making any profit on It, but suffering losses, the full extent of which will be proved at trial ‘The Plaintiffs contend that each of the Defendants is fully responsible to Sime Darby Engineering to the full extent of the latter's loss, which amounts to a minimum of RM796, 120,868,63. 64, 40 C. MAERSK OIL QATAR PROJECT (i) Background In December 2008, Maersk Oil Qatar AS (*MOQ") and Qatar Petroleum (“QP) decided to further develop the Al Shaheen Fisld offshore Qatar, by drilling more than 160 production and water injection wells during a 6-year period, together with the construction of 15 new platforms with production and accommodation facilities. By letter dated 30!" March 2008, MOQ invited Sime Darby Engineering to participate in the bid. Attached to the letter was a note giving an over-view on the Scope of Work, which stated as follows:~ “Package 16, BE Process and BG Utility Platforms The scope of the work includes the design, engineering, procurement, fabrication, onshore commissioning, load out, sea fastening, transportation to Company's designated off-shore location, installation there and hook- up and commissioning of the facilities, which shall inolude: a. BE process platform; b. BG utility platform. The BE process platform includes jacket and topside module and the BE/BD bridge. The BE process platform includes the following main facilities: ¢. Liquid heating and separation;65. 41 4. Crude oil stabilization and export; ©. Gas compression and dehydration; 1. Produced water treatment and disposed by injection; Utility systems The BG utility platform includes jacket and topside module and the BG/BD and the BG/BC bridges. The BG utility platform includes the following main facilitie: h. 51 MW turbine driven power generators; 1. 8 water injection trains, total 8,000 mar; J. Utility systems." Sime Darby Engineering's Clearance for Bidding was prepared on 8 May 2006 by Zaki and 1 other. Sime Darby Engineering's bid was submitted on 26" October 2006. By a Bid Authorisation Form dated 2% February 2007, Sime Darby Engineering authorized the submission of its bid. Zaki was among the 4 Sime Darby Engineering officers who signed and prepared the said Bid Form. Shukri, Rahim and Kadir were among the 4 Sime Darby Engineering officers who endorsed and approved as members of the Tender Submission Committea. Accordingly, the said Defendants were personally responsible for committing Sime Darby Engineering to bid for the MOQ project.66 67. 42 Prior to the submission of its bid to MOQ, Sime Darby Engineering had caused the preparation of a Summary of Significant Risks, which was considered by the board of directors of Sime Darby Engineering in approving the participation in the bid for the MOQ Project. Each of the Defendants therefore had actual knowledge of the risks, including that Sime Darby Engineering was “not well experienced with offshore transportation and installation’. The Summary also stated that as the main EPCIC contractor, Sime Darby Engineering would be responsible for the detailed engineering, equipments, exposure to the imposition of Liquidated and Ascertained Damages, hooking and commissioning risks By a contract dated 20" February 2007, MOQ awarded its project to Sime Darby Engineering, which provided for Engineering, Procurement, Construction, Installation and Commissioning contract (“EPCIG") of Al Shaheen Block 5, Development Plan 2005 ~ Package 16 comprising BE Process and BG Utility Platform Modules (“Moa Project"). The contract amount was stated to be USDG32 million (RM2,217,058,000). The effective date of the contract was 24" February 2007, with completion on 21% October 2008, that is, within 2 years 8 months (32 months)43 (i) Beyond the Competence or Capacity of Sime Darby Engineering to properly carry out and complete the MO 68. 69 Project within time Stated in very brief terms, the MOQ Project required Sime Darby Engineering, as the main contractor, to design and construct the following:- - 18 platforms: = 2 modules: - 15 bridges; = 3. SPM buoys; and - 270 km of interfield pipelines to be installed Further, the works had to be performed in a separate and discrete way as to the following stages:- (Design Engineering; oy Gil) Construction: (iv) Transportation and Installation; and (¥) Hook up and Commissioning70. 44 Having regard to:~ (the size and compiexi of the MOQ Project; (il) the tack of experience of Sime Darby Engin: with several of the scope of works: (lil) the lack of exposure of Sime Darby Engineering to conditions in Qatar, this being its 2" venture there; (iv) the value of the contract; and (v) the resultant over-reliance on sub-contractors to perform nearly all aspects of the project each of the Defendants acted negligently in committing Sime Darby Engineering to the MOQ Project, which they knew of ought to have known was beyond the capability or competence of Sime Darby Engineering and its area of expertise, Alternatively, it was foreseeable that the project was fraught with intractable problems. In consequence, the Plaintiffs contend that the Defendants acted in breach of their duties, as pleaded in Paragraphs 8 to 10 above, by bidding for the MOQ contract,45 (lil) Appointment of RNZ integrated (M) Sdn Bhd as n 72. “0 (ii) ait) Designers for the MOQ Projec The Defendants knew or ought to have known that the most critical element for the success of the MOQ Project is its drawings and design. Accordingly, appointing @ reputable designer with cutting edge personnel of high caliber was essential. Proper due diligence ought to have been exercised by the Defendants in choosing @ designer of standing, repute, experience and expertise. In fact, at the bid proposal stage, the board paper prepared to obtain Sime Darby Engineering's board's approval to bid for the MOQ Project, named euch a reputable designer, namely Ranhill WorleyParson Sdn Bhd, as the detailed bid and engineering subcontractor. ‘The Defendants, however, caused the appointment of RNZ Integrated (M) Sdn Bhd (“RNZ") as the designers for the MOQ Project. RNZ is @ company incorporated under the laws of Malaysia, with a paid-up share capital of RMt million. It is engaged in the businesses of engineering conultation and construction work, Ite 4 shareholders Rozali bin Ahmad 710,000 shares Suhaimi bin Deraman: 120,000 shares Zulkefly bin Mansor .000 shares {million sharesc 3 { r l e 78 46 all of whom are also directors, together with 4 others. The Plaintiffs contend that RNZ did not have the necessary experience or expertise to design the plans for the MOQ Project, which was well beyond its capabilities or competence. Accordingly, the Defendants were negligent in appointing RNZ (to whom fees totaling RM66.6 million was paid) to provide detailed engineering and design drawings for the MOQ project (iv) Waiver of RNZ’s Performance Bond In April "2007, RNZ requested for a waiver of its contractual obligation to provide to Sime Darby Engineering a Performance Bond in the sum of RM6.6 million by way of a bank guarantee, purportedly to enhance its (RNZ’s) cash flow position. Performance bonds are found in building and engineering contracts of this nature to ensure that a party to whom such a Bond is issued has recourse to a 3! party, usually a banker, in the event that the party on whose behalf the Bond is given defaults. Hence, it is usually in the nature of a security. In the instant case, the Performance Bond was for the benefit of Sime Darby Engineering. Without due assessment of the risks involved or justification by RNZ in respect of the request, Kadir and76. 7 78. 47 Zaki caused Sime Darby Engineering to agree to the waiver, in consideration of a reduction of RM3,984,824.00 from RNZ’s fees of RM66.6 million The Plaintiffs contend’ that Kadir and Zaki acted wrongfully and in breach of their duties to Sime Darby Engineering as outlined in Paragraphs 8 to 10 above, by agreeing to waive the Performance Bond as it was foreseeable that RNZ may be in default as the contract progresses. Thus, when RNZ was found to be in breach of its obligations and/or Sime Darby Engineering had a claim against it, there was no Performance Bond to call an, The Plaintiffs contend that Sime Darby Engineering has accordingly suffered a loss in the sum of RM6.6 million representing the monies that would have been payable by RNZ under its Performance Bond if it were not wrongfully given up by Kadir and Zaki, Sime Darby Engineering claims the said sum from Kadir and Zaki (v) Incomplete and Poor Quality desian by RNZ Although the MOQ contract is an EPCIC contract, with Sime Darby Engineering (and not RNZ) bearing the liability for the design drawings, the Defendants caused Sime Darby Engineering to rely wholly on the designs drawn by RNZ. The Vendor Data Incorporation, an integral79, wi) 20, 48 and critical part of the design drawing, was prepared by RNZ. They were incompetently drawn and of such poor quality that they ultimately le¢ to higher construction and procurement costs, including substantial structural redesign, high bulk material supplies and high wastage of material and fabrication rework. Zaki had actual knowledge of the serious problems in the engineering detailed design in February 2008 when he was summoned to MOQ's office in Doha to be told of the same. Upon his return from Doha, Zaki discussed these problems with Kadir and another personnel of Sime Darby Engineering. Thus, Kadir was also aware of these serious problems in the engineering detailed design since sometime in Fe jary 2008 Zero Zero Settlement between Sime Darby Engineering ad RNZ By letters dated 18 November 2008 and 5" January 2009, Sime Darby Engineering informed RNZ of its intention to charge RNZ for the additional costs incurred by reason of RNZ's poor quality/incompetent drawings totaling RM13,653,982.27,82. 83 84, 49 Between June 2007 and March 2008, RNZ had submitted some 12 Change Orders in the aggregate sum of RM5,755,386.00 Rather than pursuing vigorously the claim by Sime Darby Engineering and assessing the veracity of RNZ's claims, Sime Darby Engineering concluded @ Zero Zero Settlement with RNZ whereby Sime Darby Engineering dropped all its claims against RNZ. Further, no minutes were recorded of @ meeting of the Tender Review Committee held on 8 September 2009 which purportedly authorized Sime Darby Engineering to agree to the Settlement with RNZ. Zaki executed the Sub-contract Closure Letter and Certificate of Completion on 11" ‘September 2009 evidencing the settlement. Shukri, ae the executive head of the E&U Division and Zaki as the General Manager (operations) are liable for reaching a deal with RNZ which was against the interests of Sime Darby Engineering and a reckless disregard of the same, (wit) ntion and other Monies to RNZ On 4" November 2008, RNZ requested Sime Darby Engineering to approve completion of the works, and to issue the Certificate of Completion. By letter dated 18"a5. 86. 87. 50 November 2008, Sime Darby Engineering declined to do s0 citing outstanding issues relating to the detailing engineering that had to be resolved. However, Sime Darby Engineering paid RM4 million to RNZ on 19 November 2008 as early release of RNZ's progress payments Shukri, Rahim and Zaki, who authorized Sime Darby Engineering to make the payment of RM4 million to RNZ in November 2008 acted against the interests of Sime Darby Engineering in failing to take into account the poor quality of |RNZ’s services which did not Justify any payment. RNZ's works were only completed on 31% March 2009. By letter dated 12" June 2009, RNZ requested Sime Darby Engineering to release 60% of the retention monies (RM3,105,000.00) held by Sime Darby Engineering to assist RNZ to manage its operation costs. On or about 15" September 2009, Sime Darby Engineering released 100% of the retention sum of RM6,210,000.00 to RNZ. In authorizing Sime Darby Engineering to release the said ‘sum of RM6,210,000.00 to RNZ, Shukri, Rahim and Zaki acted wrongfully and In breach of the duties pleaded in Paragraphs & to 10 above, because it was not in the Interests of Sime Darby Engineering to release the51 retention monies in circumstances when Sime Darby Engineering had numerous complaints against RNZ for the latter's poor quality design drawings and other services which would have exceeded the retention monies of RMB,210,000.00 88. Shukri, Rahim and Zaki failed to appreciate the true purpose of retention monies, that is, it was a form of security for Sime Darby Engineering's claims against RNZ: its premature and unjustified release gravely prejudiced Sime Darby Engineering. 89. In consequence, Sime Darby Engineering seeks to recover the said sum of RM6,210,000.00 from Shukri Rahim and Zaki. (vill) Dishonest Misrepresentation made by Shukri as to RNZ 80. Shukti informed a meeting of the Sime Darby Audit Committee held on 16"* November 2009 that Sime Darby Engineering was in discussion with MOQ with regard to a possible claim against RNZ for compensation for cost incurred and rectify flaws in RNZ's engineering design 81. Shukri knew or ought to have known at that meeting (on 16" November 2008) that Sime Darby Engineering had:52 (i) concluded a Zero Zero Settlement with RNZ on 8 September 2008; (il) executed the Certificate of Completion and Sub- Contract Closure Letter dated 11" September 2008; and (iil) released all the retention monies to RNZ. In consequence, Shukri acted dishonestly and in breach of the duties pleaded in Paragraphs 8 to 10 above, when he made the said representation on 16" November 2009) to his superior officers. The Plaintiffs contend that Shukri was not truthful because he intended to cover-up the problems posed by RNZ for as long as possible (ix) Transportation and Install The type of installation barge that was intended to be used for the MOQ project was a Derrick Lay Barge (“DLB*). In September 2006, Sime Darby Engineering invited Seaway Heavy Lifting Ltd of Netherlands (“Seaway”) to be its sub-contractor for transportation and installation ( 1") for the BE and BG platforms for the MOQ Project. Seaway proposed a lump sum price of US$25,823,000.00, Seaway's proposal was used in Sime. Darby Engineering's bid submitted to MOQ.94 96. 96. w iy 53 Seaway’s proposal to act as the Tal sub-contractor in the MOQ Project was never accepted by Sime Darby Engineering. Neither did Sime Darby Engineering secure @ suitable DLB. Thus, In a meeting with MOQ on 12" November 2008, Sime Darby Engineering informed MOQ that Sime Darby Engineering did not have an exclusive agreement with Seaway to secure the heavy lift vessel Stanislav Yudin. At the time of the award of the MOQ contract (20" February 2007), Sime Darby Engineering did not have a contract with Seaway (or any other T&I sub-contractor) Neither had Sime Darby Engineering secured @ DLB The Plaintiffs contend that the Defendants acted in gross negligence by failing to take an elementary step in an EPCIC contract like MOG with a completion poriod of 32 months by having in place prior to or at the time of the award of the MOQ contract (20! February 2007):~ an executed agreement in writing with Seaway or another reputable T&I sub-contractor; and a time charter for @ suitable DLB for substantial and relevant period of the MOQ contract,97 98 99 co i 100. 54 particularly against the background of having used Seaway's quotation in Sime Darby Engineering's bid for the MOQ Project. By a fax message of 26% March 2007, Seaway informed Sime Darby Engineering of its intention not to proceed with a cub contract for the MOQ Project. Accordingly, the appointment of a suitable Tal sub-contractor and a OLB assumed critical and urgent importance. By letter dated 30" April 2007, MDL Energy Pte. Lid («MDL") proposed a DLB “AP Prakash” to Sime Darby Engineering, from 16" February © 2009 _—for US$68,437,037.00. Although lengthy negotiations took place between Sime Darby Engineering and MDL relating to @ possible hire of "AP Prakesh", no contract “locking up “AP Prakash’ was concluded with MDL, Subsequently, “AP Prakash” was sold In early 2008, that is, some 2 years after the problem first emerged, Sime Darby Engineering considered using a vessel named DLB 264, but was rejected because it was an old vessel with safety concerns. In any event, it was not acceptable to MOQ. The next vessel that came up for consideration was Puteri Sime 786 which was being constructed in China. By letter{ 101 C 402. l 103 55 dated 17 February 2009, MLC Shipbuilding Sdn Bhd ("MLO"), the builders of the vessel, informed Sime Darby Engineering that Puteri Sime would not be constructed in time. Yet, on 28" May 2008, Sime Darby Engineering lasued a Letter of Intent with respect to Puteri Sime, Wt was only in July 2008 that Sime Darby Engineering secured a DLB from National Petroleum Construction Company (*NPGC") for US$40,975,00 with installation only taking place in September 2009, The installation cost overrun incurred by this date (September 2009) totaled RM119 million or 40% of the total T&1 cost overrun Similar cost overrun took place in the transportation sector which totaled RM180 million. Sime Darby Engineering had secured transportation vessels to be in place for the original timeline of March/April 2000 Although Sime Darby Engineering could not commence installation works then, these vessels had been hired and had to be paid while they were idling. As a result, Sime Darby Engineering was compelled to extend the hire period from 2 months as budgeted to 6 months. By the matters pleaded in Paragraphs 93 to 102 above, each of the Defendants acted in gross negligence in allowing an incredible period of dithering and delay, which resulted in substantial cost overrun. The Plaintiffs104. 105 56 contend that each of the Defendants is liable for all losses suffered by Sime Darby Engineering by reason of their negligent conduct and/or reckless inaction. Construction cost overrun totaling RM187.6 million as at May 2010 represented the second largest component of cost overrun due largely to the under-costing in the Bid, combined with numerous engineering design and drawing fiaws, which resulted, intor alia, in re-work of the platforms, numerous variation and change orders and appointment of additional sub-contractors. Construction delays accounted for 11 months, which represented 1/3 of the entire contract period In addition to the Defendants causing Sime Darby Engineering to place an over-reliance on RNZ for design and drawings, the Defendants failed to employ competent personnel in Sime Darby Engineering who had sufficient expertise and experience in understanding the MOQ Project. Thus, there was inadequate internal Quality ‘Assurance/Quality Control (“QA/QG") verification, compounded with excessive outsourcing to sub- contractors without any of adequate review by Sime Darby Engineering of the servicesiworks provided by euch sub contractors,106 107 108 57 In totality, the Defendants undertook a wholly incompetent operation, which resulted in delay and the resultant losses to Sime Darby Engineering, which the Defendants are liable to compensate. (xl) Hook-up and Commissioning The cost overruns for the hook-up and commissioning phase of the works totaled RMGS million ae at May 2010, which resulted in substantial rework and modification works on the platforms to be performed offshore. This meant that work barges were replaced by accommodation rigs and vessels so that they could be stationed directly at the platforms, and in @ condition to withstand bad weather. Some RM64 million was expended for higher chartering rates for accommodation rigs and vessels and the extension of time that ensued to complete the work ‘The Plaintiffs contend that the inexperience and lack of expertise of each of the Defendants in leading @ project that they were not competent to be associated with, meant thet insufficient planning and preparat matters wholly foreseeable resulted in delays as pleaded in Paragraph 107 above, The Plaintiffs contend that each of the Defendants is liable for negligently performing thelr tasks.| 108. 58 (xll) Incompetent Choice of Sub-Contractors The over-reliance by Sime Darby Engineering on sub- contractors is evidenced by the payment of RM2,267,000.00 to 489 sub-contractorsivendors for the MOQ Project. Further, the Defendants were grossly negligent in the appointment of some of the sub- contractors. Without having any previous experience in structural or marine matters, Petrolife Engineering Sdn Bhd (Petrolife”) was engaged for @ sub-contract for structural works with a contract value of RM13.3 million. The pre~ qualification documents submitted by Petrolife suggested that the majority of their prior projects concerned man- power services, with the highest contract value awarded being @ mere RM34,000. As was completely foreseeable, Petrolife sub-contracted its work to another entity, TOTL Engineering Sdn Bhd. ‘Although Zaki had actual knowledge that an entity called Dynac dominated the HVAC (heating, ventilation, and air conditioning) systems market in Malaysia, he appointed another entity, Duplex Energy Sdn Bhd (‘Duplex’) to perform the HVAC work for the MOQ Project purportedly because Zaki wanted to break Dynac’s dominance and to create greater flexibility in pricing for future projects. The:112. 113. 114 59 pre-qualification documents submitted by Duplex disclosed that they had minimal experience for HVAC. works, with previously completed projects having a contract value not exceeding RM150,000.00, ‘As was wholly foreseeable, Duplex out-sourced the HVAC works to another entity, Arrow Platform. When payment had to be paid, Zaki authorized payment to Duiplex (and not Arrow Platform). Duplex did not make any on- payment to Arrow Platform, although the latter had actually carried out the works. The Plaintiffs contend that the selection of sub- contractors was incompetently carried out by the Defendants, and against the interests of Sime Darby Engineering, (xiif) Consultants A total sum of USS43,448,000.00 (approximately 7% of the contract price) was paid by Sime Darby Engineering to various consultants. Of the various consultants, only Almana Trading Co. (WLL) was Sime Darby Engineering's official sponsor/consultant for the MOQ Project and in this regard, Sime Darby Engineering had paid Almana Trading Co. (WL) US$12,640,000.00 (2% of the contract price) upon award of the MO Project,60 ‘The Plaintiff contend that apart from the appointment of Almana Trading Co. (WLL), the services provided by all other consultants appointed for the MOQ Project i.e Incobliss Consulting Sdn Bhd; CV International Ltd & Intraline Resources Sdn Bhd, were offering services which may not have been lawful under the law of Malaysia Further, payments were made to the said consultants without consideration Despite the exclusive basis of Ayfmana Trading Go. (WLL) appointment, Sime Darby Engineering appointed Incobliss Consulting Sdn Bhd (“Incobliss") by executing a Business Development and Consultancy Agreement on 31% January 2007 for a fee of USS3 million for purportedly Incobliss’ involvement in the bid stage of the MOQ Project. Incobliss was only incorporated as a private limited company under the laws of Malaysia on 15! January 2007, and was engaged in the business of general trading. Accordingly, Incoblise could only have been paid for services rendered to Sime Darby Engineering after ite incorporation on 15% January 2007, and not for any purported services rendered at the bid stage, that is, prior to October 2008. A Simo Darby Engineering document entitled “NOTES TO MD (P&C)* bearing the date 5" January 2007 records:118 61 “agent : BBB Ltd. Tho Indications received for AAA prompted SDE (Sime Darby Engineering) to enter in communication with MOQ representative CCC on on 17 December 2006. This meeting was performed and CCC offered his services at 0.5%." ‘The Plaintiffs contend that the true recipient of the US$3, million consultancy fees was not Incobliss, which merely acted as a conduit for alleged payment to third parties unknown to the Plaintiffs By an Agreement for Consultancy Services dated 8" January 2007, Sime Darby Engineering appointed CV International Limited ("CV International") to provide marketing services. Payments were made to, CV International on or about 12" April 2007 and 25" May 2007. The Plaintiffs contend that the true recipient of such payments was not GV International, which merely acted as a conduit for alleged payment to third parties unknown to the Plaintiffs By letter dated 28"* February 2007, Intraline Resources Sdn Bhd (“Intral 10") offered to provide engineering review services to Sime Darby Engineering for a fee of US$25,280,000.00, and was appointed on that basis. A120. 124 62 Sime Darby Engineering document entitled “Notes to MD (P&C)" bearing the date 5" January 2007 records: “Pursuant to your approved action to engage “AAA™ as agent through Intraline and Hero Epoch at a fee of 8%, we have nonetheless engaged In negotiation with the party which resulted in the reduction of the fee from 8% to 4%" ‘The records maintained by Sime Darby Engineering do not indicate that any services were rendored by Intraline or Hero Epoch. In committing Sime Darby Engineering to the appointment and authorizing payments, as pleaded in Paragraphs 114 to 119 above, each of the Defendants acted in breach of the duties pleaded in Paragraphs 8 to 10 above. Further, the Plaintiffs contend that the consultants were offering services which may not have been lawful under the laws of Malaysia. In consequence the Defendants who directed the appointment of the said consultants may have caused Sime Darby Engineering to act contrary to the law and cause reputational damage to Sime Darby Engineering. In any event, no consideration was given by the said consultants which justified Sime Darby Engineering paying them a total sum of US$30,808,000.00. The Plaintiffs si k the recovery of the same from the Defendants.