A legal suit involving hundreds of millions of ringgit between national electricity company Tenaga Nasional Bhd (TNB) and a foreign bank was settled out of court recently, the Dewan Rakyat was told today.

The Union Bank of Switzerland Abtiengesellschaft (UBS) had sought about RM326.8 million (US$86 million) compensation in 2001 following the termination of a contract by TNB.

However, Energy, Communications and Multimedia Deputy Minister Tan Chai Ho would not reveal the terms of the settlement and the amount of compensation paid by the energy giant.

"UBS and TNB have resolved the dispute between them to their mutual satisfaction and as a result, the high court proceedings have been concluded. The terms of the settlement are confidential and neither party will be making any further comment," he said.

Tan said the ministry would not elaborate on the case beyond saying that "despite the compensation, TNB is still financially well".

Case settled

UBS was appointed by TNB as bond manager and consultant in 1997. TNB signed a contract with UBS to buy bonds worth RM1.9 billion (US$500 million) from the bank.

The deal was aimed to expand TNB's capital expenditure. However, due to alleged mismanagement within TNB, the contract was terminated in 2001.

UBS later took their case to court and served a writ on TNB for compensation, while TNB served a counter writ on the bank.

The case was heard in London from July 14 to July 16 this year, but both parties made a U-turn on July 17 by announcing the out-of-court settlement.

Confidential terms?

The deputy minister was responding to Husam Musa (PAS-Kubang Kerian) who asked for a response on the TNB-UBS legal suit during the question-and-answer session.

He later told reporters that the issue showed "bad management" in TNB and said the matter would have reduced public confidence in the company.

"I urge TNB president Dr Awang Adek Hussein to concentrate on management and administration of the company, rather than on his party, which is always looking for a chance to attack PAS Kelantan," he said.

Awang Adek, who is also Umno Kelantan treasurer, was appointed TNB chief last year to replace Dr Jamaluddin Mohd Jarjis who is now second deputy finance minister.

In a supplementary question, Chow Kon Yeow (DAP-Tanjong) asked Tan whether the terms of settlement were classified confidential under the Official Security Act and whether these would be revealed in the TNB annual report as it involved public interest.

Tan kept mum for a while prompting jeers from opposition MPs. He then replied: "The case was only settled recently, I don't know whether it has been classified or not yet...we wait and see, be patient."

When met at the Parliament lobby later, the deputy minister declined to comment on the alleged mismanagement in TNB, beyond saying "they were some problems".