Hydroshoppe sues govt, others for RM1b over KL Tower concession

Summary

• Former KL Tower operator sues govt and several others for damages amounting to over RM1b.

• Hydroshoppe and its subsidiary that handled the tower management claim govt wrongfully terminated an agreement in 2022 which gave them a 30-year concession to operate KL Tower.

A company engaged to operate the iconic Kuala Lumpur Tower in 2022 has sued the government and several others for over RM1 billion.

Hydroshoppe Sdn Bhd, together with its subsidiary Menara KL Sdn Bhd (MKLSB), are claiming damages from Putrajaya over alleged wrongful termination of their agreement in November 2022, which included an extension of the company's concession from 15 years to 30 years.

This followed the government's decision in May last year to award the tower management concession to LSH Service Master Sdn Bhd instead.

LSH Service Master is a joint-venture vehicle between two companies LSH Best Builders Sdn Bhd and Service Master (M) Sdn Bhd.

According to their statement of claim, Hydroshoppe and MKLSB are seeking the Kuala Lumpur High Court to declare the 2022 agreement as still valid and binding on the government.

The companies are looking to have the court declare that they are still entitled to the tower concession for 30 years from Dec 31, 2022 and that the government had committed a breach of trust when it awarded the contract to another entity.

On top of this, Hydroshoppe and MKLSB want the court to also declare that LSH Service and its parent companies have committed inducement for breach of the 2022 agreement.

They are seeking compensation from all the defendants for damages, including loss of business opportunity "to enjoy the contractual and commercial benefit" from the concession agreement.

"Subject to assessment, to the best of the plaintiffs' knowledge and estimate, such expectation loss would exceed RM1 billion," the companies said in their court filing.

‘Not merit in claims’

In an immediate response, Lim Seong Hai Capital Berhad, the parent company of LSH Best Builders, said they have engaged legal counsel and are preparing a full defence against the claims.

The company said their concession for KL Tower management was acquired through a proper formal process as outlined by the government.

"We believe that the claim against us is without merit and cannot be established.

"Our appointment was based on a legitimate government-led procurement process.

"We are not privy to any purported arrangements made between the outgoing operator (Hydroshoppe/MKLSB) and the government," the company said in a statement.

Further, Lim Seong Hai Capital also gave their commitment to focus on executing their obligations under the concession, which will begin this April 1.

For the record, MKLSB, previously fully owned by Telekom Malaysia Berhad (TM), had designed and constructed the KL Tower which was opened to the public in 1996.

It had been the sole operator of KL Tower since under concession contracts from the government, which was renewed every 15 years.

Controversial shares sale

In 2022, it was reported that TM had transferred its 10 million shares in MKLSB to Hydroshoppe.

The deal, which was made in October of that year, had raised eyebrows because the subsidiary was purportedly very profitable, and the buyer was not a well-known company.

According to a Malaysiakini report, as Annuar Musa was the minister in charge of communications when the sale occurred, netizens had raised questions about whether the former Ketereh MP had anything to do with the decision.

Annuar has since denied being involved in the transfer of shares.

MACC later announced that they launched an investigation into the "suspicious" selling off of TM shares to Hydroshoppe.

Following this, Hydroshoppe issued a statement threatening legal action against any parties involved with disseminating false and/or defamatory information regarding the company, MKLSB, and/or their directors.

In April 2023, Hydroshoppe managing director Abdul Hamid Shaikh Abdul Razak Shaikh was charged in court with offering bribes amounting to RM7.5 million to Annuar.

He was alleged to have committed the offence as inducement for the then minister to expedite a proposed sale of shares and a concession takeover from Menara Kuala Lumpur Sdn Bhd.

Hamid had pleaded not guilty and claimed trial.

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