Blow for Samy Vellu as MIED case proceeds

By Baradan Kuppusamy

September 07, 2010

Samy Vellu will now be required to address charges of graft and mismanagement in relation to the MIED. — file pic

KUALA LUMPUR, Sept 7 — MIC president Datuk Seri S. Samy Vellu was dealt a blow after the Court of Appeal rejected his appeal against a derivative action suit filed by Maju Institute of Education Development (MIED) member and former Youth chief S. Vigneswaran.

Samy Vellu must now answer all the allegations laid against him by his detractors, who have lodged numerous police reports alleging corruption and mismanagement in the scandalised MIED running into the hundreds of millions of ringgit.

Former ally and MIED CEO P. Chitrakalas Vasu has already been charged with misappropriating RM4 million from the institution, but critics like Gerakan Anti-Samy Vellu (GAS) leader and sacked MIC member V. Mugilan have demanded investigations be extended to include Samy Vellu and all his actions in relation to MIED.

“I believe the upcoming court hearing will expose Samy Vellu for good,” Mugilan told The Malaysian Insider.

On Monday, the Court of Appeal unanimously held that the action was valid and may proceed as applied for in the High Court.

On June 14, Judicial Commissioner Mah Weng Kwai ruled that Vigneswaran had a case against Samy Vellu and the trustees of the MIED — most of whom are seen to be Samy Vellu loyalists who once held senior positions in the MIC.

Derivative action under Section 181A of the Companies Act is unique as it allows a stakeholder to hold principle office bearers, trustees and employees accountable for the losses the company might have suffered as a result of their actions or omissions in protecting the interests of the corporation.

On Monday, the Court of Appeal panel comprising Datuk Zainun Ali, Datuk Ramly Ali and Datuk Jeffrey Tan Kok Hwa, said Section 181A of the Companies Act was applicable to all categories of companies.

“We find no reason to interfere with the findings of the High Court,” Zainun said in dismissing an appeal by Samy Vellu, the MIED chairman, and the MIED trustees.

Politically, the rejection is a significant blow for MIC president who is fighting internal and external pressure to step down by December 31 at the latest.

“It is like a fishbone in his throat,” said a senior MIC leader referring to the potential exposure if the MIED case proceeds in the High Court.

Case management has been set for September 25.

“It’s more like a dagger pointed at his heart,” said another MIC leader. “The Pandora’s box would explode open with this action against the MIED.”

While the MIED was incorporated as a company, it has raised funds from the Indian public for its various projects — including the flagship AIMST University in Kedah.

The government also gave RM300 million for the university project.

In the derivative action, the MIED is the plaintiff and is seeking an order that Samy Vellu be stripped of his rights as a signatory to MIED cheques with immediate effect and for an injunction to stop him from continuing to serve as chairman and member of the board of trustees.

If the action is successful, it would severely dent Samy Vellu’s ambitions of continuing as MIC president. He has said he will resign sometime in September 2011 although his current term ends in March 2012.

It is widely expected that he plans to hold an early presidential election sometime in mid-2011, and allow a free and open contest that would likely see a three- or even four-way contest between deputy president Datuk G. Palanivel, senior vice-president Datuk Dr S. Subramaniam, former deputy president Datuk S. Subramaniam and former vice-president Datuk S. Sothinathan.