EcoWorld Unit Exiting MySJ For Over RM24 Million

A consent judgment was entered for MySejahtera developer Entomo and Entomo CEO Raveenderen to buy back MySJ Sdn Bhd investor Hasrat Budi’s entire 10% stake at RM24 million, plus interest at 10% per annum, by end Oct. Hasrat Budi is fully-owned by EcoWorld.

KUALA LUMPUR, Sept 13 – Eco World Development Group Berhad’s wholly-owned subsidiary, Hasrat Budi Sdn Bhd (HBSB), wants to be bought out of MySJ Sdn Bhd – the private company operating the MySejahtera health app – for more than RM24 million.

The property developer said in a filing with Bursa Malaysia that last July 28, a consent judgment was entered for Entomo Malaysia Sdn Bhd (the company that originally developed MySejahtera for the Malaysian government) and Raveenderen Ramamoothie (a director of MySJ and founder CEO of Entomo) to purchase all of HBSB’s shares in MySJ and to pay HBSB RM24 million, plus premium at the rate of 10 per cent per annum calculated from August 27, 2021, until the date of full payment.

Under the consent judgment, Entomo and Raveenderen (also known as Ravee) are to pay HBSB the RM24 million plus interest to buy back HBSB’s 10 per cent stake in MySJ within three months from last July 28.

“This consent judgment will not affect the ongoing legal action filed by HBSB against Revolusi Asia Sdn Bhd, Entomo and Raveenderen for the breach of certain representations and warranties under the share sale agreement as announced on 18 April 2022,” EcoWorld said in its July 28 announcement.

According to the draft consent judgment filed by HBSB last July 20 at the High Court here, the directors appointed by HBSB will also resign from MySJ’s board. 

The current sole director appointed by HBSB onto MySJ’s board is Liew Kee Sin, who is chairman of EcoWorld and was once listed among Malaysia’s 50 richest by Forbes in 2013. EcoWorld executive director Heah Kok Boon is Liew’s alternate director on MySJ’s board.

The draft consent judgment also stated that upon payment of the option price to HBSB and the resignation of the director appointed by HBSB from MySJ’s board, HBSB would have no further claims under MySJ’s share sale agreement and shareholders’ agreement, both dated August 27, 2021, except in respect to its lawsuit.

Last February 24, HBSB filed suit against Entomo Malaysia (formerly KPISoft Malaysia Sdn Bhd); MySJ shareholder Revolusi Asia Sdn Bhd; Raveenderen; MySJ directors Anuar Rozhan and Shahril Shamsuddin; and MySJ to insist on its strict contractual rights from the shareholders’ agreement – due to a conflict over directorship of MySJ.

In a court submission filed last July 16, HBSB maintained that all purported board meetings held by MySJ were invalid, including the first board meeting held last March 2 without Liew’s consent and attendance.

HBSB said the draft minutes of the March 2 board meeting showed that the defendants (“having full control of the board”) purported to appoint two additional directors – Raveenderen and Raja Mufik Affandi Raja Khalid – to MySJ’s board. Raja Mufik is chairman and co-founder of investment holding company Touch Group Holdings. 

Based on the draft meeting minutes, HBSB also accused the defendants of attempting to disregard MySJ’s coordinating committee – which is separate from the board – and to “further dilute the powers” of the coordinating committee “against the terms and spirit of the shareholders’ agreement”.

Subsequently, on March 29, HBSB exercised its put option under the shareholders’ agreement to recover its investment and funding costs that required Entomo Malaysia and Raveenderen to purchase HBSB’s existing 10 per cent stake in MySJ.

According to Companies Commission of Malaysia (SSM) records obtained by HBSB last April 24, Revolusi Asia – with Raveenderen as majority shareholder – is the majority shareholder in MySJ. Another MySJ shareholder is P2 Asset Management Sdn Bhd, which is separately suing Entomo Malaysia, Revolusi Asia, and MySJ for alleged breach of a share sale agreement.

It is unclear if the government has made any payment yet to MySJ for the management and operations of MySejahtera that was first launched more than two years ago in March 2020 under a one-year corporate social responsibility (CSR) agreement, after which the government was meant to pay for MySejahtera services from April 1, 2021.

MySJ Expected RM110 Million Payment From Government In April, Plus RM5.8 Million Monthly Revenue From July Onwards

MySJ Sdn Bhd’s cash flow analysis and funding recommendations for 2022. Graphic from draft minutes of MySJ’s first board meeting held on March 2, 2022, in Kuala Lumpur, disclosed in Hasrat Budi Sdn Bhd’s affidavit filed in the High Court in Kuala Lumpur on April 29, 2022.

According to the draft meeting minutes of MySJ’s March 2 board meeting disclosed by HBSB’s affidavit filed last April 29, MySJ expected to receive RM110 million cash payment from the government in April this year for “government service projects”, post-finalisation of a service agreement with the Ministry of Health (MOH). 

MySJ also estimated monthly revenue of about RM5.8 million from July onwards from providing “government-mandated services” related to MySejahtera, including MySJ Traveller, vouchers under the Perlindungan Tenang Voucher government programme from insurance companies, and Covid services.

Overall, MySJ forecast RM200 million in revenue (RM110 million for 2021 and RM90 million for 2022) from government service projects for Covid-related applications and maintenance in MySejahtera rendered. Both budgets had supposedly been approved by the Cabinet, according to the company.

RM200 million for a mobile app is more than the Budget 2022 allocation of RM171.2 million for Universiti Islam Antarabangsa Malaysia Hospital, nearly half of Universiti Malaya Medical Centre’s (UMMC) budget this year of RM410 million, and exceeds the 2022 allocation of RM137 million for MOH’s radiotherapy and oncology programme.  

MySJ Sdn Bhd’s detailed cash flow for 2022 (estimated based on current liabilities and operations). Graphic from draft minutes of MySJ’s first board meeting held on March 2, 2022, in Kuala Lumpur, disclosed in Hasrat Budi Sdn Bhd’s affidavit filed in the High Court in Kuala Lumpur on April 29, 2022.

The draft meeting minutes revealed that MySJ’s monthly expenses was about RM700,000, excluding the monthly RM5 million OEM licence fee payment to Entomo Malaysia. 

Under the five-year licence agreement until end 2025, MySJ is to pay Entomo Malaysia RM338.6 million for the intellectual property (IP) of MySejahtera and licensing fees to use KPISoft proprietary software to develop the MySejahtera app.

“The management of MySJ explained that the Company is currently facing a budget deficit and is in need of funding especially for the next three months,” said the draft meeting minutes of MySJ’s first board meeting last March 2.

“Ravee had informed the Board that MySJ is in need of financial support based on KPMG’s review of the Company’s accounts. KPMG has already completed their review of MYSJ’s 2021 accounts and are currently awaiting a financial support letter.”

MySJ Sdn Bhd’s projects, sustainability plan, and key drivers. Graphic from draft minutes of MySJ’s first board meeting held on March 2, 2022, in Kuala Lumpur, disclosed in Hasrat Budi Sdn Bhd’s affidavit filed in the High Court in Kuala Lumpur on April 29, 2022.

Back in MySJ’s board meeting last March 2 – before the government relaxed most Covid-19 restrictions – the company had forecast 35 million users, 30 million daily transactions, and two million businesses on the MySejahtera app, according to a graphic in its draft meeting minutes.

Last June 11, the most recent date of publicly available MySejahtera data on MOH’s GitHub database, fewer than 90,000 unique users checking in on the app was recorded. The highest ever number of unique users checking in with MySejahtera was on November 20 last year at some 11.16 million.

Before things turned sour between shareholders and investor HBSB sought to pull out, MySJ had grand ambitions to be a publicly listed tech company as “the owner” of MySejahtera, envisioned to be a one-stop app with multiple commercial opt-in services spanning digital health, commerce, and payment. For most of the pandemic, the government mandated the use of MySejahtera to check in at public premises, punishing people for non-compliance with hefty fines of up to RM10,000.

Health Minister Khairy Jamaluddin told Parliament last July 25 that MOH is currently awaiting approval from the Ministry of Finance (MOF), after MOH completed direct negotiations to procure “management” of MySejahtera, but did not disclose the amount settled on.

Although Khairy previously insisted to the Senate last March 31 that the government owned MySejahtera’s IP rights, modules, and source code, and personal data collected through the mobile app, the minutes of MySJ’s September 22, 2021, coordinating committee meeting – as disclosed by HBSB – quoted Raveenderen as saying that MySJ owned MySejahtera IP rights and that the government could only “take over” the app by buying the IP rights from MySJ for RM300 million to RM400 million.

Malaysia Launches New MySejahtera Features, While Australia Dumps Covid App

Health Minister Khairy Jamaluddin speaks at a press conference on April 27, 2022. Picture from the Ministry of Health.

Parliament’s Public Accounts Committee (PAC) revealed last March 24 that MySejahtera was developed for the government without a contract with the developer, Entomo, and that ownership of the app, initially introduced for contact tracing of Covid-19 cases, was unclear with the direct appointment of a new company, MySJ, to manage the mobile application.

The PAC has completed its investigation into the procurement and development of MySejahtera, pending the tabling of its report expected in the next Dewan Rakyat meeting.

Despite dropping virtually all Covid rules, including MySejahtera check-ins from May 1 and mask mandates from September 7, Khairy has sought to ensure the continued relevance of the controversial app in health care beyond the pandemic.

Australia, on the other hand, has decommissioned its AU$21 million (RM65 million) Covid-19 contact tracing app. Health Minister Mark Butler reportedly urged Australians last month to delete the COVIDsafe app, branding it a “colossal waste” of taxpayers’ money and a failure after the Bluetooth-powered app identified only two unique coronavirus cases.

Yet, amid ongoing litigation involving MySJ shareholders and public distrust against MySejahtera over personal data security concerns, Khairy launched new MySejahtera features like health screening and childhood immunisation records, as well as registration of organ donation pledges. The minister also said MySejahtera will feature blood donation records and a digital “pink book” for maternal and child health records.

In relation to one’s health status, MySejahtera only allows users to input their weight as a single undated entry, thus preventing users from monitoring their weight trend over time, unlike Apple’s Health app (free for iPhone users) that allows users to regularly enter their weight on a specific date and time, showing one’s weekly, monthly, six-monthly, and yearly average weight.

HBSB’s deadline of end October for Entomo Malaysia and Raveenderen to make payment of RM24 million plus 10 per cent interest falls after the scheduled tabling of Budget 2023 on October 7, amid speculation that Prime Minister Ismail Sabri Yaakob may dissolve Parliament after the federal budget is tabled, but before it is passed. 

It is uncertain if Khairy will be reappointed as health minister after the 15th general election, given that the Umno lawmaker has said that he may not even run for office after Umno deputy president Mohamad Hasan told Khairy to make way for him in Khairy’s parliamentary seat of Rembau. 

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