Court: VSS payment to former employees of ex-Selangor MB valid

PUTRAJAYA: The Federal Court has ruled that ex-employees of former Selangor mentri besar Tan Sri Abdul Khalid Ibrahim can keep the RM2.7mil paid to them seven years ago as compensation in a voluntary separation scheme (VSS) as the payment was valid.

Court of Appeal president Justice Rohana Yusuf, who chaired a fiveman panel, said the Court of Appeal had erred when it ruled that the mentri besar, in his capacity as the chairman of Menteri Besar Selangor (Inc) (MBI), must have the approval of the board of directors to make the VSS payments.

The panel unanimously agreed with the appellants that Khalid was the sole legal entity under MBI.

“Khalid was legally empowered to make the VSS payments without the approval of MBI’s board of directors (BOD).

“He is then not fettered and not subjected to the board’s approval,” Justice Rohana said here yesterday.

The apex court then ordered for the Court of Appeal’s order to be set aside and for the High Court’s order to be reinstated. The Bench also ordered that RM50,000 in costs be paid.

In May 2015, MBI had filed the suit against seven former staffers to reclaim the RM2.7mil paid to them via VSS in 2014, claiming that the payments were unlawful as they did not have the approval of the board.

The seven are former MBI chief executive officer Faekah Husin, who was paid RM695,400; former chief operating officer Rohany Talib (RM524,400) and former officers Arfa’eza Abdul Aziz (RM476,935), Mustapha Mohd Talib (RM265,320), Rahimah Kamarudin (RM265,650), Dr Sulaiman Masri (RM182,385), Abdul Halim Mohamed Yusof (RM186,300) and Tuan Nazuri Tuan Ismail (RM115,200).

In response, the defendants said Khalid was then a statutory corporation sole constituted in a single person pursuant to the MBI Enactment.

As a corporation sole, they said it was within Khalid’s powers, as conferred by Section 4 of the MBI Enactment, to approve the VSS payments without prior BOD approval.

In 2017, the Shah Alam High Court ruled that the compensation paid was valid. In May 2018, the Court of Appeal reversed the decision, saying the approval was still needed.

The appellate court agreed with the High Court that the plaintiff was a corporation sole and that there was no express requirement in law wanting any approval by the BOD but ultimately, it found that good governance, accountability and corporate governance dictated that Khalid must get the BOD’s approval.

The eight ex-employees then appealed to the Federal Court and posed four legal questions, among them whether MBI that was established by the Menteri Besar Selangor (Inc) Enactment 1994 was in law a corporation sole or corporate aggregate, to which the court had answered it to be a corporation sole.