KPJ sues 11 former board members over alleged breach of duty in Lablink stake sale

KUALA LUMPUR (Jan 19): KPJ Healthcare Bhd has filed a lawsuit against 11 former board directors over the sale of a 49% stake in its pathology and laboratory unit Lablink (M) Sdn Bhd to KL Kappa Sdn Bhd for RM119.92 million in March 2018.

KPJ, which still owns a 51% stake in Lablink, claimed that these individuals who sat on its board at the time had allegedly breached their fiduciary and/or statutory duties to the group, and failed to exercise reasonable care and diligence in the transaction with KL Kappa, which is backed by Singapore-based private equity firm Quadria Capital Investment Management Pte Ltd.

The 11 individuals it is suing are: former chairman Datuk Kamaruzzaman Abu Kassim; former president and managing director Datuk Amiruddin Abdul Satar; former executive directors Aminudin Dawam and Jasimah Hassan; former independent non-executive directors Tan Sri Siti Sa’diah Sh Bakir, Datuk Azzat Kamaludin, Datuk Dr Zaki Morad Mohamad Zaher, Zainah Mustafa and Dr Kok Chin Leong; and former non-independent non-executive directors Zulkifli Ibrahim and Mohd Sahir Rahmat.

The hospital operator, however, did not name Prof Datuk Dr Azizi Omar, who was an independent non-executive director of the group at that time, as a defendant. Appointed to KPJ’s board in February 2016, he is currently a non-independent non-executive director.

KPJ is seeking a declaration that the defendants were negligent and breached their fiduciary duties.

It is also seeking compensation of up to RM95.77 million for losses it said it suffered, and interest and damages as assessed by the court.

When KPJ announced the disposal in 2018, the group said the tie-up was in line with its plan to expand Lablink’s pathology and diagnostics businesses to locations where private healthcare was in demand.

It would also drive Lablink’s mission to be the leading pathology group in the region and enhance shareholders’ value, it added.

KPJ shares closed six sen or 3.97% higher at RM1.57 on Friday for a market capitalisation of RM7.11 billion.

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