RM1 billion suit surrounding KL Tower heads for trial with new concessionaires as defendants

One of Malaysia's most iconic structures built during the economic boom of the nineties has been thrust back into the limelight over a concession granted by the government, following a Court of Appeal decision this week to reinstate its new operator as a defendant in a RM1 billion suit by its former concession holder.

The Kuala Lumpur Tower, the world's seventh tallest telecommunications tower, has been the subject of a suit by its former concession holders HydroShoppe Sdn Bhd and Menara Kuala Lumpur Sdn Bhd (MKLSB) against the government and three companies which were granted a 20-year concession from last year to manage the structure.

On Aug 10, the Court of Appeal reinstated LSH Service Master Sdn Bhd and two other companies linked to tycoon Lim Keng Cheng as defendants in the suit, overturning the High Court's decision last year to remove them.

The trial has been scheduled for June 28 to July 2, 2027.

It comes more than a year after a night of high drama outside the Kuala Lumpur Tower, when police and multiple government enforcement agencies arrived to forcibly evict HydroShoppe and Menara Kuala Lumpur's staff, not long after the suit was filed to declare the new concession void.

In their suit, HydroShoppe claimed that LSH Capital and its subsidiaries were behind the government's decision to breach its contract, saying they had prior knowledge that the communications ministry had decided to renew HydroShoppe's concession.

The matter quickly spiralled into controversy after claims of cronyism in the awarding of the contract to LSH Capital, following an opposition MP's revelation that the daughter of Deputy Prime Minister Fadillah Yusof sits on the board of LSH Best Builders, one of the three companies named in the suit.

The government, however, said the new concession agreement was awarded through a transparent tender process.

The basis of HydroShoppe's suit goes back to 2021, when Telekom Malaysia, which had managed KL Tower since 1996 through its then subsidiary Menara Kuala Lumpur Sdn Bhd (MKLSB), informed the government that it wanted to focus on its its core business, and as such could not continue managing the tower due to losses suffered during the Covid-19 pandemic.

Four months later, the communications ministry informed TM of a proposal by a company to take over its shares in MKLSB .

This was followed by five companies submitting their proposals on running KL Tower, as well as on buying off MKLSB from TM.

On Aug 1, 2022, the government appointed HydroShoppe, which also meant the concession remained 100% Bumiputera.

The company said it was promised a 15-year concession in exchange for buying the entire stake in MKLSB.

But the deal meant HydroShoppe incurring several expenses, such as settling outstanding invoices amounting to RM3.2 million, refunding contractors RM495,000, in addition to RM100,000 for the purchase of the shares.

HydroShoppe also undertook all liabilities of MKLSB amounting to over RM300 million.

Following the change of government in November 2022, HydroShoppe said it was agreed that it would be business as usual as far as its concession was concerned, and that a request would be made to extend the contract from 15 to 30 years.

On Jan 5, 2024, HydroShoppe was notified that the concession would be tendered via Request for Proposal (RFP). It said that this was despite an earlier agreement and conditions placed by HydroShoppe to take over MKLSB.

Five months later, in May 2024, the government announced that LSH Service Master had been given a 20-year concession starting April 2025, marking for the first time a non-Bumiputera company running the KL Tower.

HydroShoppe and MKLSB subsequently filed a RM1 billion suit against the government and the communications ministry, LSH Service Master Sdn Bhd, LSH Best Builders Sdn Bhd and Service Master (M) Sdn Bhd.

Among others, it said that HydroShoppe managing director Abdul Hamid Shaikh Abdul Razak Shaikh was induced to take over MKLSB's shares, alongside its liabilities of over RM300 million.

As the suit was pending in court, drama played out late on the night of April 16, 2025, when the new concessionaires descended on KL Tower backed by scores of police officers and other enforcement agencies, including from the communications ministry and Federal Land Commission, to forcibly evict HydroShoppe from the complex.

Following the incident, KL Tower was sealed off to visitors and tourists for a week, marking only the second time (the first during the Covid-19 lockdown) that it had been closed since its completion in 1996.

HydroShoppe slammed the authorities for their "thug-like action" and lodged a police report against LSH, claiming damages to its properties during the eviction process.

The eviction is the subject of another suit by Hydroshoppe, in which the High Court granted it leave for judicial review against Federal Land Commissioner Azmi Zain over two eviction notices issued in April 2025.