KUALA LUMPUR, July 5 — A carnival organiser is suing an incorporated body under the Youth and Sports Ministry for almost RM42 million over the delay in a hawker centre’s construction that resulted in the arrest and remand of its executive chairman.

Lawyer Adnan Seman, representing KL Karnival Sdn Bhd and its executive chairman Mohd Rustam Roshandin, said his clients are seeking compensation for money spent to build the centre as well as registration fees paid to the company by 630 hawkers.

"We are here today to file the suit, as my client’s reputation and image has been irreparably harmed during the course of this issue,” he told reporters outside the High Court in Kuala Lumpur.

The issue began in the second half of 2016, when KL Karnival scouted an area at the Sports Extreme Park near Bukit Jalil, which was deemed suitable to construct a hawker centre that could accommodate up to 1,000 businesses.

"We approached Perbadanan Stadium Malaysia (PSM) and we eventually received an offer letter from them on Nov 15,” said Rustam.

The offer letter granted the firm the rights to rent 123,000 sq feet of the location for RM13,000 per month along with five per cent of the rental income, starting from Jan 1, 2017 up until Dec 31, 2020.

In December 2016, KL Karnival began construction on the site, including cutting down thickets and elevating the land. Other works included installing electricity and water supplies, and 100 sport-lights around the area of the centre.

"We also opened up the centre for registration, with 430 tent hawkers and 210 container hawkers signing up and paying between RM10,000 to as much as RM43,000 for their spots,” he said.

The hawker centre was planned to open on Mar 24, 2017. However, PSM informed them in January that two-thirds of the site would be temporarily taken over to build a parking lot, which would be handed back to KL Karnival once completed.

Rustam pleaded with PSM not to do so, as the contractors had already been paid to to finish the centre within two weeks, and that building the parking lot would also affect the hawkers’ businesses.

"Nonetheless PSM took back the site and began building in March, making us unable to open the centre properly,” he said.

The parking lot was completed by June, but the centre was not permitted to finish up the remaining construction work on grounds that the parking lot’s contractor had yet to hand over the site to PSM.

"Due to this, only 30 hawkers began doing business at the centre, with many holding off until the proper opening,” Rustam said.

Throughout the year KL Karnival kept pressing PSM to hand over the site so it could complete construction, which he said went unanswered.

"We were eventually informed the site would not be handed back to us, but instead given to a developer by the end of 2017. However PSM said they were willing to offer us compensation,” he said.

To add to Rustam’s woes, the company came under fire from the registered hawkers who claimed they had been cheated. The issue also turned into a controversy online.

"Over 120 police reports were lodged against me, and in December last year I was arrested at home for cheating the hawkers. I had to spend two nights at the Jinjang Lock-Up Centre,” he said.

Despite being offered an alternative location for the centre by then-minister Khairy Jamaluddin during a meeting in February, Rustam rejected it as the location was both too small and unsuited.

"Not only has my good name and the company’s image been tarnished, our total losses amounted to almost RM42 million,

"We just want to ask the new government to quickly help us resolve this matter which has dragged on for longer than it should have,” he said.