khalid ibrahim pc 120809 01 Selangor Menteri Besar Abdul Khalid Ibrahim (left) has been granted a stay by the High Court today from paying RM66 million to Bank Islam over the purchase of shares in 2001 pending his appeal.

The stay was granted by justice Rohana Yusof, who also fixed February next year to hear Khalid's suit against the bank.

She made the order in her chambers after counsel, Malik Imtiaz Sarwar, Matthew Patrick Thomas and Asma Mohd Yunus representing Khalid and Ganesan Nethi, representing Bank Islam submitted the matter in chambers.

Khalid was ordered to pay Bank Islam (US$18.521 million) or RM66 million on Aug 21, after the financial institution obtained a summary judgment (judgment without full trial) for a loan he took to purchase Guthrie Bhd shares.

On July 18, Khalid, who was former Guthrie chief executive officer, filed a suit against Bank Islam over the wrongful sale of his Guthrie shares, which he had purchased under the Bai-Bithamin Ajil (BBA) loan agreement.

The facility was to enable Khalid to acquire Guthrie shares and the loan period was for a period of 10 years and this would allow sufficient time for Guthrie shares to appreciate to the extent that he and Bank Islam would be able to gain profit from the transaction.

Shares sold without Khalid's knowledge

Khalid claimed the price of the Guthrie shares did appreciate in early 2007, and sometime in March 2007, the bank had sold his shares without his consent.

The former CEO said the premature sale without his knowledge was a breach in the BBA facility.

Its (premature) sale resulted in the (RM66 million) shortfall for Bank Islam and also a financial loss to Khalid.

He claimed that had Bank Islam followed instructions, he and the bank would have made a substantial profit as Guthrie shares were appreciating as a result of a merger exercise.

The Selangor Menteri Besar is seeking:

  • a declaration that there existed a collateral contract between Khalid and the bank on the BBA loan agreement,
  • a declaration that the BBA facility in isolation and without collateral contract was null and void.
  • a declaration that Bank Islam had breached the collateral contract or the BBA facility and
  • general damages, following the breach of the collateral contract and the wrongful sale by Bank Islam of Khalid's Guthrie shares charged under the BBA.
Bank Islam filed its suit, a week later, based on the RM66 million losses it suffered following the shortfall sell.

In an immediate response, Khalid welcomed the stay order as he felt the matter should be dealt with during a full trial.

"I would like to thank my lawyers and also hope that the Court of Appeal would fix an early hearing date to set aside the summary judgement."

"So far, the appellate court has yet to fix a date," Khalid said.

Basis for stay application

Malik had submitted that Khalid opposes the summary judgment as he felt the matter should go before a full trial as it involves complex issues of law and also breach of collateral contract by Bank Islam.

"The court needs to investigate the wrongful sale of Khalid's shares, charged under the BBA facility," he said.

"Furthermore, we felt that Bank Islam cannot proceed to execute the sale of Khalid's shares without his approval despite him missing some payments."

Ganesan submitted that the bank had the right to sell the shares as part of a debt recovery process and hence, the summary judgment was the right decision.