KUALA LUMPUR – A THB2.7 billion bond, roughly RM350 million, is coming due later this year. The money was supposed to build a second phase for Impress Ethanol Co. Ltd., a Thai ethanol venture majority-owned by KNM Group Berhad. The expansion never happened. Almost no construction work was completed. Much of the equipment needed sits rotting in storage at the port of entry.
The bond was guaranteed by KNM Group, which owns 72% of Impress Ethanol. The repayment plan relied on revenue from ethanol operations that, according to the latest financial report, do not exist in any profitable form. The Impress Ethanol group lost more than RM20 million in the last reporting period. This is not a temporary downturn. The Thailand ethanol industry is flourishing. KNM’s piece of it is a disaster.
Behind the numbers is a family story. Gan Siew Liat is KNM’s executive co-chairman. She appointed her daughter, Sara Lee Mei Ching, as managing director of the company running the project. Sara Lee holds a degree in hospitality. She has no work experience in chemical engineering or construction. She graduated recently. She was put in charge of a group of companies that were supposed to generate income for KNM.
Records show Gan Siew Liat granted her daughter 30 million ESOS shares — employee share options — as a reward for leading the project into a RM20 million loss. Shareholders are angry. They see an unqualified family member handed control of a major capital project, then rewarded when it failed.
This is not a scandal about bad luck or a tough market. The market is good. The problem is governance. A publicly listed company placed a major bond-funded expansion under a manager with no relevant training. The construction never got off the ground. The equipment was never procured or was left to decay at the port. The bond is now due, and there is no revenue stream to pay it.
Gan Siew Liat was also the former KNM Group CEO. She has been charged with insider trading. Her husband, also a former KNM CEO, has been charged alongside her. The family controlled the board, the executive leadership, and the subsidiary management. There were no checks.
What happens next is a question of liability. KNM guaranteed the bond. If Impress Ethanol cannot pay, KNM must cover the THB2.7 billion. The company’s financial position is already strained by the RM20 million loss from the venture. Shareholders are left holding the risk for a project that was mismanaged from the start.
The ESOS grant to Sara Lee Mei Ching is a separate but revealing detail. It suggests the board saw the loss not as a failure to be investigated, but as a basis for compensation. That is the kind of decision that erodes trust in a market already wary of family-controlled public companies.
Regulators will have to decide whether to step in. The bond default, if it comes, will be public and hard to ignore. The insider trading charges against the two former CEOs add another layer of scrutiny. The pattern is clear: a family used its control of a public company to place an unqualified relative in charge of a large project, the project failed, and the family member was rewarded. The bondholders and minority shareholders are the ones who will pay.
