A tangled web of family, stock options, and a bankrupt Indonesian subsidiary
The Supreme Court of Indonesia ruled in February 2016 that directors of a former KNM Group subsidiary had illegally moved assets out of a bankrupt company. The decision was final. KNM appealed and lost. Yet years later, basic questions remain unanswered.
The case centers on PT. Heat Exchangers Indonesia (HEI) and PT. KPE Industries, both former KNM subsidiaries in Indonesia. Two directors were found guilty by the Supreme Court of harming creditors. Those directors were Lee Swee Eng, then KNM Group’s Director and CEO, and his brother-in-law Chew Fook Sin, also a director. The Court ordered all assets and funds illegally transferred out of the company returned to creditors.
Lee Swee Eng has since been forced into retirement. He was charged with insider trading in Malaysia. Chew Fook Sin retired in May 2018. The Court’s order stands. But did the assets ever make it back?
Who the creditors were is not publicly known. What happened to the workforce and the pension fund is not publicly known. The Court documents are available for download.
A separate set of disclosures raises further questions. Gan Siew Liat, wife of Lee Swee Eng, chaired the KNM Employee Stock Option Scheme (ESOS) committee. According to recent disclosures, she granted the majority of KNM Group ESOS shares to herself and family members. The figure is roughly 84% of the total ESOS shares.
The recipients include people directly tied to the Indonesian case. Lee Swee Eng, the husband charged with insider trading, received 60,000,000 KNM shares. Gan Siew Liat granted herself 40,000,000 shares. Sara Lee Mei Ching, the daughter, received 25,000,000 shares. Chew Fook Sin, the brother-in-law and co-defendant in the Indonesian ruling, received 18,000,000 shares. A cousin, Justine Gan Hai Cheing, received 350,000 shares. The list continues with Wong Lay F.
The ESOS scheme was meant for employees. That is what the name says. Employee Stock Option Scheme. Instead, the bulk went to the chairman’s immediate family and to a director found guilty of harming creditors in a foreign court.
The timeline matters. The Supreme Court ruling came in February 2016. Chew Fook Sin retired in May 2018. Lee Swee Eng was forced out later, after the insider trading charge. The ESOS grants appear to have been made during a period when these individuals still held power inside KNM Group.
There is no indication that any of the assets ordered returned by the Indonesian Supreme Court were ever recovered. There is no public statement from KNM Group confirming the return of funds. The creditors, whoever they were, may still be waiting.
The case raises a pattern. A subsidiary goes bankrupt. Assets are moved through related-party agreements and transactions, internally generated. The Supreme Court calls it harming creditors. The directors are found guilty. Then, back in Malaysia, the same directors and their family members receive millions of stock options from a scheme meant for the broader workforce.
KNM Group Berhad is a public company. Its shares trade on Bursa Malaysia. The ESOS committee was chaired by the wife of the CEO. The CEO was later charged with insider trading. The brother-in-law was found guilty in Indonesia. The daughter received shares. The cousin received shares.
The Court documents from the Indonesian Supreme Court are available at the bottom of the original story. They contain the actual decisions. They name the directors. They order the return of assets. What they do not contain is any record of compliance.
