How did inflated invoices lead to RM65 million in secret profits?

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High Court Orders Trio to Repay RM43.5 Million Due to Inflated Invoices and Secret Profits

A former senior costing manager, Michael Chua, along with his wife Tan Kah Luan and mother Yeo Siok Boi, have been ordered by the High Court to repay RM43,547,282.19 to Mudajaya Corporation Bhd. This judgment stems from an admission by the trio that they owed Mudajaya RM65 million, a figure derived from secret profits generated through overcharging subcontractors on a RM720 million power plant project. The court found that the trio had benefited from these illicit gains, which were facilitated by manipulating invoices and directing "off-book" funds as per Chua's instructions.
Manipulation of Subcontractor Payments

Mudajaya, acting as the primary subcontractor for the power plant project, engaged a spun piling contractor. This contractor subsequently invoiced three other subcontractors, with the charge amounts being determined by Michael Chua. The mechanism involved inflating the progress claims submitted by these subcontractors to Mudajaya, achieved by manipulating either the rates or the quantities of work.
Creation and Diversion of "Off-Book" Funds

The overcharging on subcontractor invoices generated excess funds, referred to as "off-book" money, which were not transparently accounted for within the company's standard financial records. These funds were then directed to Michael Chua or to third parties as per his directives. The court found substantial evidence supporting the existence of unauthorised payments and a clear misappropriation of company funds through this scheme.
Rejection of Coercion Claims and Upholding Settlement

The High Court dismissed the defence's assertion that the settlement agreement, signed by Chua, his wife, and mother, was a result of coercion, duress, or undue influence. The court found sufficient evidence of unauthorised payments and misappropriation, validating the settlement where the trio acknowledged owing RM65 million to Mudajaya. The agreement also involved the transfer of 22 properties to the company.
Ongoing Appeals Against the Decision

Despite the High Court's ruling and the settlement agreement, both Mudajaya Corporation Bhd and the trio of Michael Chua, Tan Kah Luan, and Yeo Siok Boi have lodged appeals against the decision. The appeals indicate that the legal proceedings concerning the repayment and the underlying financial irregularities are not yet concluded.

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How did inflated invoices lead to RM65 million in secret profits?

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