Shareholder row pits Perak sultan v Najib's brother

Sultan's business partner claims oppression by company owners aligned to Johari Razak

A messy legal confrontation at a private Malaysian company, a beneficiary of a lucrative contract from Brazil's iron ore giant Vale SA, is pitting the corporate interests of Malaysia's deputy king, Perak's Sultan Nazrin Muizzuddin Shah, against Prime Minister Najib Abdul Razak's brother, Datuk Seri Johari Razak.

The shareholder dispute at Nautilus Tug and Towage Sdn Bhd (NTT) has now spilled into the Malaysian courts where Sultan Nazrin Shah's long-time friend and business partner Timor Shah Rafiq is alleging corporate oppression of a minority shareholder by the company's other owners who are aligned to Mr Johari.

In court papers reviewed by The Straits Times, Datuk Seri Timor has alleged that shareholders affiliated to Mr Johari, who own a majority interest in NTT, breached their partnership agreement when they unilaterally brought a new shareholder into the joint venture last year.

Mr Timor, whose friendship with Sultan Nazrin Shah dates back to their university days in the United Kingdom in the late 1970s, has also claimed in court filings that he has been denied full access to scrutinise the financial accounts of the company despite being a board director.

Mr Timor declined comment for this article, while Mr Johari, the second of five brothers in the Razak family and a senior partner at law firm Shearn Delamore, did not respond to requests for comment.

The shareholder face-off at NTT which has yet to go into full trial is the source of much speculation in logistics and shipping circles because of the lucrative contract the company has with Vale.

NTT's 15-year service agreement to provide Vale with tug boat services for its regional distribution hub at the Teluk Rubiah terminal in Perak is worth more than US$220 million (S$304.7 million). Shipping industry executives expect the Brazilian mining and logistics giant to expand the scope of the contract in coming years.

According to financial and legal executives close to the situation, Mr Timor, a US citizen of Afghan descent, established a business relationship with Vale in 2010 when the Brazilian industrial conglomerate was considering building a regional distribution hub in Sultan Nazrin Shah's home state of Perak.

The prospect of providing tug boat services to Vale emerged in the business talks and Mr Timor began scouting for private local logistics operators that could take on the service contract.

That led to the incorporation of tug boat operator NTT, which was originally 80 per cent owned by a private concern called Azimuth Marine Sdn Bhd, a corporate vehicle controlled by Mr Johari and veteran logistics sector player Suresh Emmanuel Abishegam. A firm led by Mr Timor and corporate interests of Sultan Nazrin Shah held the remainder.

According to court documents, shareholder troubles surfaced in August 2015 over demands from Mr Timor to inspect NTT's financial records as one of its directors. When the controlling shareholders of Azimuth denied those requests, Mr Timor turned to the courts.

In mid-March, the Malaysian High Court ruled in favour of Mr Timor, granting him full access to inspect all financial documents at NTT. The majority shareholders at NTT are appealing against the ruling.

The shareholder fight took another twist last year when Azimuth Marine disposed of a 10 per cent interest in NTT to businessman Jaya Sudhir Jayaram. Little is known of his links to the shareholders of Azimuth Marine.

Mr Jaya Sudhir maintains a very low profile and Malaysian financial executives who are acquainted with him said he is involved in a wide range of businesses that include defence and procurement contracts with the Malaysian government.

More than a decade ago, he was identified as a shareholder in a private entity that was investigated for its role in a scandal over illicit payments in the oil-for-food programme by the Iraqi regime.

A version of this article appeared in the print edition of The Straits Times on May 27, 2017, with the headline 'Shareholder row pits Perak sultan v Najib's brother'. Print Edition | Subscribe