exclusive A Taiwanese compact disc (CD) maker is accusing a Malaysian company, which claimed to act on behalf of 'the ruling party and represented the Malaysian government', for failing to pay RM3.9 million after the delivery of five million pieces of blank CDs.

Gengo International Co Ltd is now claiming a total of US$5.4 million (RM20.3 million) for breach of contract from the errant company as well as from another Malaysian firm, which acted as an intermediary for the purchase.

The amount Gengo is seeking is calculated from the penalty agreed by the companies in their agreements in the event of default in payments. Gengo also vowed that it would make public to the international arena the fraudulent manner these two Malaysian companies conduct business.

Gengo general manager Hsu Yuan-Chang told malaysiakini that his company supplied the orders to Nor Azami Bersatu Teguh Sdn Bhd (NABT), a construction company, through First Choice Partners (M) Sdn Bhd.

Hsu said that he was given the impression by the two Malaysian companies that NABT was acting on behalf of "the ruling party and represented Malaysian government", and thus considered trustworthy.

Representatives from NABT were unavailable for comment, but Ridzwan Abdul Rahman from First Choice, which acted as an intermediary for the multi-million ringgit deal, indicated that his company was taking NABT to court over the non-payment.

Ridzwan told malaysiakini that First Choice was also 'stuck' because of NABT's non-payment.

Government agent

According to Hsu, Ridzwan informed him that NABT was backed by Umno and that the purchase of the CD-Rs (CD-Recordable) "has something to do with several major government projects such as the Smart School, telemedicine, electronic government and several other projects within the Multimedia Super Corridor in Malaysia."

Hsu added that it was well-known to all CD suppliers around the world since 1998 that the Malaysian government was looking to purchase a large quantity of CD-Rs from overseas.

"We received inquiries concerning our price and supply capacity from at least one to two Malaysian companies every day," he said in an e-mail sent to malaysiakini .

Hsu said NABT entered into an agreement with First Choice for the purchase of the CD-Rs on Aug 7 last year. A week later, he said, First Choice entered into an agreement with Gengo to supply the CDs.

Hsu added that the duration of the contract was for 30 months.

"The order quantity for the first six months was five million per month and then 20 million pieces per month for the remaining 24 months. The total number of CD-Rs the companies agreed to purchase from us was 510 million pieces," he said.

Hsu said that on Aug 15, NABT had issued its purchase order to First Choice who then passed on the order to Gengo, adding that his company delivered the CDs in early September.

"The buyer should follow this up by issuing a letter of credit for payment to us in seven days' time but NABT continued to advise us with some reasons for delaying the payment," said Hsu.

"They even told us that the Malaysian government had not granted payment and gave many reasons for the delay."

Bank Negara delay

Ridzwan also told Hsu in an e-mail message that he was informed the funding for the purchase was channelled through Bank Negara to NABT, adding that "if you have done deals with the government before, you know the amount of red tape that has to be passed before funds are released".

The same reason was also given in a letter by First Choice president Johnny Koh to Hsu, stating that the delay in payment was caused by Bank Negara.

"Please be assured that the order is still very firm and this delay is purely the result of the usual government disbursement procedures," said Koh.

Hsu was then informed by Ridzwan that Bank Negara had approved the funds and it would be transferred to Gengo soon. This was more than a month after the goods have been delivered to NABT.

Hsu said that after another round of excuses, NABT finally informed him that it was unable to pay and that it could not return the five million CDs. It also confessed that it did not represent the government as originally claimed.

Hsu added that the non-payment has caused Gengo much loss as it had declined other orders after signing the agreement to supply for the two Malaysian companies.

False assertion

According to Hsu, he was told by Ridzwan that NABT had not been truthful in conducting the business deal, that it is not buying on behalf of the government and that no funds are coming from the government.

Ridzwan also informed Hsu that he was merely conveying information which he had learnt from his company president Koh, who was in direct communication with NABT.

Hsu also said that Gengo was asked to entertain representatives of the two Malaysian companies every time they visited Taiwan.

Gengo was asked to provide the Malaysian visitors first-class travel, accommodation with meals and transportation and "any form of entertainment that you deem fit to make this visit a memorable one."

Letters to PM

In desperation, Gengo wrote to Prime Minister Dr Mahathir Mohamad 12 times asking him to settle the matter as it involved a company "which belonged to the ruling party".

Hsu said that there had been no response from Mahathir, prompting him to believe that NABT was an Umno-backed company, which was the reason for it to "act so illegally like a bandit".

Hsu said NABT was given until Nov 6 last year to make the payment. In a strongly-worded communication to Ridzwan in late October, Hsu asked Ridzwan to inform NABT that Gengo "will ignite the war fire to burn on Nov 6" with the aim of redeeming its pride.

He said that Gengo is a subsidiary company to a large corporation and that it will "win this war whatsoever" so that it will not be looked down upon by the Taiwanese business industry.

On Nov 10, when no payment was in sight, Gengo gave NABT until Nov 16 to settle the matter. Until today, NABT has yet to pay Gengo.

Legal notice

On its part, First Choice has issued a legal notice to NABT in mid-November to execute the agreement without delay, but Hsu claimed that even the legal threat failed to make NABT pay the amount owed.

Ridzwan told malaysiakini that First Choice acted as an intermediary in the deal and almost all communications between First Choice and Gengo were through him.

He said that his boss, Koh, had shown him NABT's company profile and told him of someone in NABT stating that the company was being backed by Umno.

Ridzwan said he believed this to be true because NABT profile was impressive and showed that it has undertaken several infrastructure and construction projects, and has several subsidiary companies.

"I believed that Umno will help a bumiputra company that shows potential for growth, and NABT seemed to fall in this category based on the profile shown to me," he said.

He also said that he assumed the order for the CDs was for the government because the "order amount was large (five million pieces of CD-R per month)".

NABT has not responded to efforts by malaysiakini to obtain its comments on the issue.