KUALA LUMPUR, Nov 26 — Upset over years of unpaid rental income that has topped RM32 million, a group of foreign and local investors today pleaded with the federal government to help them get their money back from listed luxury resort operator Karambunai Corporation Berhad (KCB).

The investors, numbering over 100, had bought luxury seaside villas on Sabah's west coast belonging to KCB, which also owns and manages the five-star Nexus Resort Karambunai frequented by visitors of the state capital, Kota Kinabalu.

The privately-owned units of the Nexus Karambunai Residence Spa and Pool Villas - which KCB rents out to tourists as part of its resort - were purportedly sold and marketed by the company as early as 2006 under the federal “Malaysia My Second Home” programme.

With the purchase of the seaside villa units that cost around US$300,000 (RM965,460) to US$400,000 (RM1.287 million), the investors took up KCB's offer of a leaseback agreement, where they were supposed to receive a guaranteed rental income of around 7 per cent.

But the investors claimed today that payments have stopped coming in since early 2011.

As a legal dispute over unpaid rental from the villas continues to drag on, representatives from the Nexus Property Owners' Association (NPOA) today voiced concern that KCB's alleged neglect of their properties were causing their value to plunge.

NPOA director Tony Wrobel said the group had in the past contacted the Tourism Ministry and the government's efficiency unit Pemandu, and had even met with Malaysia's consulate-general in Hong Kong.

He said the group received “no feedback” despite their efforts.

“We would like to call on the government to direct the Ministry of Tourism and Pemandu to intervene and compel KCB to meet their obligations under all agreements with the owners, and manage and operate Nexus Bay Resorts SPV in the way it was intended,” Wrobel told a news conference at the Le Meridien Hotel here.

On top of the millions of ringgit owed to the investors, some of their villas have not been properly maintained by KCB and have been literally left to rot, Wrobel claimed.

Picture of a villa unit with its floorboards in bad condition.

At the news conference, he showed reporters photographs, purportedly of the villa units with water that seeped out of its floorboards, leaving mold on furniture and walls, saying that the buildings also had rotting wood and rusty balcony balustrades.

He also cast doubt over the buildings' construction quality.

The Australian investor based in Hong Kong alleged that break-ins and theft had occurred in some of the units due to lax security, saying that there was erosion in front of the villas despite seawalls being built.

Another investor, Briton Danny Danielis, claimed that around 23 units, including his own villa, which he had brought for his retirement, had roofs that leaked.

Danielis, who is also an NPOA director and in his 60s, accused KCB of turning some of the villas into its reception area, offices and storerooms, even as rental to some of the investors remains unpaid.

Wrobel said that on average, an investor could be paying around RM5,000 to RM6,000 each month to service bank loans for the purchase of the villas.

Picture of land erosion behind a seawall erected in front of the villas.

According to Wrobel and Danielis, 108 of the affected investors are engaged in an arbitration process in Malaysia with KCB, with the arbitrator initially set to decide on November 20 on whether the villa owners could even go on with the arbitration.

It is unclear how many investors in total were affected.

But the arbitrator had postponed the decision, Wrobel said, having noted that the investors had filed for arbitration in 2011.

According to NPOA, KCB's lawyers had used technical grounds in what appears to be an attempt to delay and throw out the group's arbitration bid.

KCB had previously committed in a letter to NPOA to pay all the outstanding rent owed by December 2011 and promised not to default further, but the investors did not receive any further payments after an initial sum in March 2011, Wrobel said.

Recently KCB sent a letter of offer to the NPOA, offering to settle the dispute over the rental income, but the investors have rejected it, Wrobel said.

Wrobel also complained that the land titles to the villas have not been transferred to the investors, saying that this rendered them helpless and unable to take over management of the villas from KCB.

NPOA suggested that an alleged dispute over the land ownership had caused the delay of the title transfer, which it said KCB was required to apply for after the villas were built.

Wrobel said the NPOA - which also has some Malaysian investors - is looking to engage a property consultant to carry out a full inspection of the condition of their villas.

NPOA, a Hong Kong registered company with four directors, is also mulling the setting up of a firm in Malaysia to possibly handle and manage the villas in the future, Wrobel said.

The duo and NPOA's public relations manager David Ko, who was also present at the news conference, said they remained open to engaging with KCB and the government.

NPOA counts over 100 investors from 31 countries, including the UK, Hong Kong, Singapore and Malaysia, as its members.

On its website, KCB listed Tan Sri Datuk Dr Chen Lip Kiong as its president, with the local tycoon also said to be one of the richest businessman in Malaysia.

Investors who bought the 243 villa units also have the option not to take up the leaseback offer, and can stay in it as the owners.