Aussie bank after MK Land founder over US$12 million debt

Westpac, one of Australia's biggest banks, is pursuing Datuk Kasi K.L. Palaniappan for defaulting loan worth millions of dollars. – Westpac Facebook pic, April 24, 2015.

As the co-founder and a director of MK Land, one of the country's biggest property developers, Datuk Kasi K.L. Palaniappan is used to featuring on lists of Malaysia's richest people. In 2007, Forbes estimated his net worth at US$127 million (RM459 million).

In Australia, however, his fortunes tell a different story: development projects involving Palaniappan (pic, right) in the affluent state of Western Australia have gone belly up, and one of the country’s biggest banks, Westpac, is pursuing him for more than US$12 million.

Federal Court documents obtained by The Edge Review reveal that Westpac issued a bankruptcy notice against him on January 16. Documents from the Supreme Court of Western Australia also show that Palaniappan, a director of real estate company Murray Riverside, owed Westpac more than US$20 million.

This debt relates to a loan on three properties south of Perth of which Palaniappan was guarantor. In a rare downturn, prices in the area of Murray Riverside’s properties fell steeply in the wake of the global financial crisis.

The company defaulted on the loan in 2012 and court action was launched after Palaniappan went another year without making a repayment.

He tried to claim that the three properties had been independently valued at US$36 million. Receivers appointed by Westpac, he said, “may have failed to exercise all reasonable care to sell the property for market value as demonstrated by advertising the land for an amount considerably less than the market value”.

But Palaniappan was ultimately unsuccessful in his bid to stop the properties being sold at a lower price. Court documents show that receivers oversaw the sale for just US$10 million, which left his company still millions of dollars in debt. As of September 2014, US$12.4 million remained outstanding, court documents show.

Palaniappan co-founded the MK Land Group and was appointed to the board in 1999. In Malaysia, he sits on the Board of the Credit Guarantee Corporation (CGC) and the Credit Bureau Malaysia (CBM), while in Australia, he is an associate of the Royal Australian Institute of Architects. – The Edge Review