Wan Suleiman FJ (reading the judgment of the Court):

Introduction

The first appellant was Menteri Besar of the State of Selangor, President of UMNO Youth, a Vice-President of UMNO, the leading political party in this country, Chairman of the Selangor Alliance during 1964-1967 and thereafter Chairman of the Selangor National Front. On 31 March 1975, he chaired a meeting of the Executive Council of UMNO Youth which was also attended by Mike Ong and Bosco, show business people, who tried to sell them the idea of staging the Muhammad Ali-Joe Bugner fight in Kuala Lumpur. Projection papers were produced showing that while the fight might cost $10-12m to promote, it might bring in a profit of $4-5m; The idea looked good - at least on paper - and all members of the Executive Committee were attracted by the idea, as they had plans to build a sports complex for UMNO Youth costing about $1/2m, So it was decided in principle to promote the fight.

Ali wanted over US$2m tax free, and Joe Bugner US$1/2m also tax free - both amounts to be paid in advance to a stakeholder. In additional there were preliminary fees to be paid.

UMNO Youth did not have any money.

How were they to raise the necessary money?

As it happened, the first appellant was also Chairman of Bank Kerjasama Rakyat Malaysia Berhad, a co-operative society registered under the Co-operative Societies Ordinance, 1948. It is Popularly known as Bank Rakyat ("the bank") and has been established to provide financial and other facilities to its members in accordance with co-operative principles.

It had millions of dollars, money deposited by its members. It also owned (a) three million ordinary shares of Dunlop Estates Berhad and (b) one million debenture stocks of Kuala Lumpur-Kepong Berhad ("the shares").

The second appellant, a chartered accountant, was Managing Director of the bank.

The third appellant was its General Manager and Secretary.

UMNO Youth's decision to stage the fight was subject to the first appellant getting from the Prime Minister the late Tun Abdul Razak government approval and backing.

The next day the first appellant was flying to Kuwait. At the airport he introduced the second appellant to some UMNO Youth Executive Council members and told them that he had got the green light from Tun Abdul Razak. The first appellant was away for three to four weeks and during his absence there were discussions about this fight between the second appellant and these members. As a result it was decided to send Mike Ong and a Jack Rennie to the US to bring the fight to Kuala Lumpur, and shortly after that Ismail Kamat (PW12), the Managing Director of United Manufacturers ("UM"), a subsidiary of the bank, was also sent by the second appellant to the US to negotiate the fight. He went armed with a letter of authority dated 8 April 1975, (D38), signed by Datuk Mohammed Rahmat, the Deputy President of UMNO Youth, as a credential to negotiate contracts for the fight. D38 clearly shows that PW12 was sent as ah authorised representative of UMNO Youth, and its third paragraph states that PW12 had authority to confirm any terms of contract with the promoters of Muhammad Ali.

PW12 left for the States on 17 April and returned on 30 April 1975, and during, that period he signed seven agreements (P17) relating to the fight (six in the States and the seventh relating to Joe Bunger in London) on behalf of the second appellant and Tinju Dunia, although Tinju Dunia had not then been formally incorporated. These agreements were signed by PW12 after communicating with the second appellant by telephone and telex for instructions and involved heavy financial commitments.

While in the States, PW12 paid US$100,000 to Muhammad Ali on 23 April before signing P17(6) and under its para. 4 Tinju Dunia had to establish an irrevocable letter of credit for US$1.9m in favour of Muhammad Ali, the money payable to him as soon as the fight had started; and there was also a forfeiture clause..