A DISPUTE over revenue and tax is threatening to break up top Malaysian legal partnership Lee, Hishammuddin, Allen and Gledhill (LHAG), where one of the lawyers in the tiff is also a prosecutor in the tax case against Najib Razak.

The LHAG partners committee issued a statement tonight saying the firm has not been dissolved, despite allegations since Friday made by several senior partners, who have cited changes in its profit distribution scheme.

“Lee Hishammuddin Allen & Gledhill (“LHAG”) views with considerable concern the various messages that have been circulated since Friday, stating the firm has been dissolved.

“At the outset, we state the firm has not been dissolved and business continues as usual,” said the law firm, which began as Allen & Gledhill in Singapore in 1902.

It formed a Malayan branch in 1959, which merged with Lee and Hishammuddin in 2005. The partnership has more than 200 lawyers and staff on its payroll.

The firm said “there are disputes between the partners, which should have been resolved in the agreed dispute resolution process: mediation and arbitration.

“Unfortunately, three partners – Saravana Kumar, Rosli Dahlan and Ong Eu Jin – chose to ignore those agreed dispute resolution process.”

It related that the three partners had emailed the entire firm at 5pm on Friday a notice to dissolve the firm immediately with one of the “Notices of Dissolution” circulated on social media.

The firm’s senior tax lawyer DP Naban, who has been appointed to prosecute former prime minister Najib Razak in his tax case, was said to have accepted the partnership had been dissolved, as had another lawyer Ooi Bee Hong.

“Their conduct caused anxiety to more than 200 employees whose livelihood and welfare depends on the firm.

“It also invited concerns and queries from clients who discovered the purported dissolution through social media,” the firm said.

LHAG also said over the weekend: “purported Notices of Dissolution, unsealed cause papers and affidavits, at times setting out highly selective facts, were also circulated on social media.

“These include copies of the firm’s partnership agreement and other confidential information.

“The firm will answer, in the correct forum, the false allegations made in these affidavits and in the Notices of Dissolution.” it added.

The firm said there was “a lot of fake news that have been circulated on social media and two items in particular require immediate responses”, that the dispute was over an attempt by young partners to illegally change the agreed profit distribution scheme.

“Not true. Fact: The real dispute concerns the proper treatment of vast sums of money running into millions (‘moneys’) received by the firm on files opened and managed by DP Naban and Saravana Kumar, two partners from the tax practice group, from clients between 2009 to 2019.

“This was discovered late last year by a newly elected partners’ committee (the highest managing body of LHAG).

“Many partners were shocked by this discovery and were determined that there should be full transparency.

“The firm’s stand is to comply with the law, in particular tax laws. Numerous attempts were made to ascertain the full facts,” it said, adding that on January 5, the partners passed resolutions by a “clear majority” to ensure full compliance with all tax laws, including seeking tax advice from the firm’s long-standing tax advisers as to the proper tax treatment of the ‘moneys’, and complying with the advice.

LHAG insisted it will oppose the injunction sought on February 7 by Naban and Ooi to prohibit the firm from seeking and implementing independent tax advice.

It also said that the firm has not been dissolved as it can only be through resolution passed by three-quarters of the equity partners.

“No such resolution has been passed. Nor is there any risk of such a resolution being passed, as the vast majority of partners oppose it,” it said.

The statement also said: “Despite being fully aware of this, on February 7, 2020, Notices of Dissolution were issued to the firm by the three partners.

“They collectively represent approximately 11% of the equity in the firm.

“These three partners had voted against the resolutions that had been aimed at ensuring that independent tax advice was taken and implemented in respect of the ‘moneys’.

“Most of the ‘moneys’ in question is attributable to files managed by Saravana Kumar, who is one of these three partners.

“If any steps are taken to dissolve the firm, the process of reviewing the appropriate tax treatment of these large sums of ‘moneys’ may be delayed or even frustrated,” it added. – February 9, 2020.