Transmile files suit against former execs

Published: 2010/04/28
Transmile Group Bhd (7000) has filed its first civil suit against its former chief executive officer, Gan Boon Aun and chief financial officer, Lo Chok Ping, after spending three years clearing up the mess left behind from an accounting scandal.

The former industry darling is seeking compensatory damages to be determined by the High Court, special damages of RM10.6 million, costs on a full indemnity basis and interest on special and/or general damages as may be awarded by the High Court.

Transmile and Transmile Management Sdn Bhd are suing Gan and Lo for grossly overstating the group's revenue and causing questionable payments and receipts in relation to the affairs of two wholly-owned subsidiaries - Transmile Air Services Sdn Bhd and Grouptech Sdn Bhd.

The writ of summons and statement of claim were filed in the Kuala Lumpur High Court yesterday, which also claimed that the former executives had breached their duty of care to the group for failing to put in place proper internal controls.
These breaches caused the group to suffer loss and damage, such as exposing the group to inquiries and prosecution by regulatory authorities and causing it to suffer reputational loss thereby affecting its future business prospects and ability to generate income.

It also caused the group to be classified as an affected company under Practice Note 17 of Bursa Malaysia as a result of it defaulting on its loan repayments.

In 2007, a special audit by Moores Rowland Risk Management revealed that the group had overstated its revenue from 2004 to 2006 by RM622 million.

The air cargo firm has been struggling to regain its financial footing ever since the debacle, charting a net loss of RM272.4 million for the financial year ended December 31 2010.

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Transmile files suit against former execs 
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