A company owned by a businessman friend of PKR leader Anwar Ibrahim has acquired a five-star hotel chain that was the subject of a deal gone awry five years ago involving Umno president Ahmad Zahid Hamidi.
Petra Group, which is owned by businessman Vinod Sekhar, announced that it had completed the purchase of a 51.5% stake in Riyaz Hotels & Resorts, placing it under Petra Riyaz which will operate a “range of lifestyle-oriented hospitality brands” in Malaysia, Indonesia and Vietnam.
“The value of the combined hotels and resorts is close to RM300 million,” the company said in a report published on a website run by Petra Group.
This comes as a rare move at a time when the Covid-19 pandemic has ravaged the tourism and hotel industry, causing many big players including five-star hotels to shut down and lay off tens of thousands of workers in the last year.
Just last week, the five-star Hotel Istana in Kuala Lumpur announced that it was ceasing operations from September, saying it had considered all options but was left with little choice.
“Even as a quarantine hotel, we are incurring monthly operational losses,” it said in a letter to its staff, adding that business had been affected by stiff competition even before the pandemic.
The hotel sector had lost over 80% of its business since the first lockdown under the movement control order in March 2020, with industry players saying more than RM6 billion was lost last year and bigger losses expected this year.
“The tourism and hotel industry is arguably one of the most impacted industries and has not seen any signs of recovery to date. It can no longer sustain; its survival is highly dependent on control of spread that would enable the relaxation of travel restrictions domestically and eventually internationally,” the Malaysian Association of Hotels, an umbrella body for hotels in the country, said in May.
Zahid’s corruption trial
The Riyaz hotel chain was the subject of a corruption trial involving Zahid, who is facing 47 corruption charges linked to Yayasan Akalbudi, a foundation under him.
It is said that in 2016, Zahid, who was then the home minister, was involved in a negotiation arranged by his daughter Nurulhidayah Ahmad Zahid, to discuss the sale of 60% shares in the hotel chain.
Testifying at Zahid’s trial last year, Ri-Yaz Group managing director Shaheen Shah Sidek, now the CEO of Petra Riyaz, said group chairman Abdul Rashid Manaf had proposed selling off his stake to save the company, a deal which would also involve Nurulhidayah taking over a bank loan the company had taken with Rashid as the guarantor.
Shaheen said following a meeting with the bank at Zahid’s office in Putrajaya, Nurulhidayah informed him that she would pay the loan’s outstanding amount of some RM8.6 million through her lawyers.
The bank later agreed to restructure the loan, but things hit a snag when Rashid refused to remain a guarantor for the loan as required by the bank.
Shaheen had told the trial of requests from Nurulhidayah and her father Zahid for the RM8.6 million to be immediately returned as the money belonged to a foundation.
He said he was shocked by the request, adding that he did not know that the money was from a foundation.
Zahid’s lawyer had suggested to the court that the money was meant as an investment on behalf of the foundation, and that the deal fell through as it was felt that the purchase was not profitable.
The court previously heard that the purchase of the stakes was made without the knowledge of its board of trustees.
Muhammad Fazli Zulkifli, an investigator with the Malaysian Anti-Corruption Commission, said he believed the decision to use RM8.6 million from its funds was because Zahid’s daughter had an interest.
“Based on our investigations and other witness statements recorded, the investment was done without the knowledge of Akalbudi board of trustees and because Zahid’s daughter, Nurulhidayah, had an interest in the investment and the payment was done by Akalbudi,” Fazli told the trial last year.
In 2019, Zulkifli Senteri, a trustee and former director of Yayasan Akalbudi, said he had never been notified of any meeting, nor had he been briefed on the activities, financial statement or expenditures of the foundation throughout his 15 years there.