Malaysia

Petronas unit sued for RM260 million over “contraband” superbikes

A fledgling Malaysian superbike maker has filed a RM260 million suit against a unit of national oil firm Petronas for breach of contract in the sale of an ill-fated decade-old racing motorcycle venture.

At the heart of the suit is a hoard of nearly 130 superbikes, the Petronas FP1, and the blueprints, that was developed for millions of ringgit but later stored in Malaysia before being sold to Momoto Sdn Bhd in a tender exercise in 2011.

Momoto said it discovered that the defendant, Petronas Technical Services Sdn Bhd, did not have the approved permits (APs) to bring in superbikes from the United Kingdom.

Documents sighted by The Malaysian Insider showed that Momoto discovered that the defendant did not pay Customs and Excise duty amounting to RM29 million for 129 superbikes.

Momoto, which has a paid-up capital of RM2.5 million, entered into an agreement with Petronas Technical Services in March 2011 following which it paid the full purchase price for 129 superbikes and spare parts from the defendant.

Also included in the agreement was the assignment of patent and industrial designs.

Momoto, which filed the suit at the High Court in Kuala Lumpur last July, said in its statement of claim its investigations revealed that Petronas Technical Services had only registered two such motorcycles with the Road Transport Department and there were no APs for the two machines.

Last August, the Customs Department seized 129 motorcycles from Momoto on grounds that the excise duty was not paid and there were no APs for the superbikes.

The customs seizure came just after Momoto had entered into a research and development agreement with a foreign partner, Suter Racing Technology AG, from Switzerland.

As a result of the breach, the plaintiff said that not only did its business deal with the Swiss company hit a snag but it also put its business reputation at stake.

"We took it for granted that Petronas Technical would have complied with the basic requirement of obtaining the APs and settled all dues to the government at the point of bringing the motorcycles into Malaysia," a spokesman for Momoto told The Malaysian Insider.

Momoto is also facing the possibility of being slapped with criminal charges for being in possession of contraband goods for which duty was not paid.

Lawyer Rajinder Singh Veriah, who is representing Momoto in the suit, confirmed the action was filed and the documents were sent to Petronas Technical Services.

"They have filed for a stay and for the matter to be referred for arbitration," he said.

Motorcycle blog www.asphaltandrubber.com reported last year that the Petronas FP1 superbike had apparently been mothballed before it was rebranded under the Momoto name when it debuted as the Momoto MM1 in July 2012.

"With the project scrapped long ago, it seemed the Petronas FP1 dream was resting six-feet-under, until now. Rebranded under the name Momoto, the Momoto MM1 is the Petronas FP1 in new clothing," the blog said.

Another site, motorcyclenews.com (MCN) reported in 2010 that it had discovered a secret hoard of 60 £25,000 (RM126,000) Foggy-Petronas FP1 road bikes in a bunker in Essex.

The site quoted what Carl Fogarty – race team manager and figurehead of the ill-fated FP1 project – said when told the news: “You’re joking – that’s amazing!” It had been thought – and stated by the team – that the bikes were shipped to Malaysia five years ago and disposed of. But in fact virtually all the bikes, initially produced for WSB racing, are still on UK soil.

It said the collection, worth around £2 million (RM10 million), was "held in a state of suspended animation awaiting, with the bikes’ owner – Malaysian oil giant Petronas – keen to draw a veil over the whole episode".

"The firm burned £30 million (RM153 million) on a WSB program that was intended to kick-start a Ducati-sized bike manufacturing business in Malaysia, but in fact petered out with a 21st place championship finish in 2006," the site said, referring to the World Super Bike series.

According to the site, the bikes were manufactured for Petronas by engineering firm MSX International in Basildon, Essex, in record time in 2002, around engines designed by Austrian firm Suter Racing.

"The idea was that the production process would then be replicated in Malaysia and form the start of a range of higher and lower-spec bikes running to ten thousand and more. 75 road bikes were built in Essex, followed by another 75 in Malaysia six months later,” the site reported. – October 22, 2013.

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