Datuk Seri Ivan Teh and the Fall of Fusionex

A Corporate Meltdown That Stunned the Tech World

As the world wound down for the holidays in December 2023, Malaysia’s tech ecosystem was jolted by news that sent ripples from Kuala Lumpur to Silicon Valley. Japanese technology giant Hitachi Ltd had filed a motion in the Malaysian High Court to wind up FusioTech Holdings Sdn Bhd—its wholly owned subsidiary that oversaw the once-celebrated Fusionex Group—and 12 related entities.

What shocked observers most was not merely the winding-up application but the revelation that Ivan Teh, Fusionex’s founder and Group CEO, along with many members of his senior leadership team, had abruptly resigned without serving notice or handing over documents, passwords, or financial records.

Hitachi’s official statement described its move as “the most cautious course of action to proactively manage and minimise the impact to everyone involved.” The company claimed it had been left in the dark—deprived of access to operating data, financial ledgers, and even employee contact lists.

For Malaysia’s technology community, the news was unbelievable. Fusionex was once seen as the country’s brightest hope in big-data analytics and artificial intelligence. Many industry leaders, from startups to global CEOs, found it hard to reconcile the courteous, diligent image of Ivan Teh with allegations of unethical and irresponsible conduct.

“How could this have happened?” asked one shocked tech founder. “Ivan was the golden boy of Malaysian tech.”

The Rise of Ivan Teh and Fusionex

Ivan Teh founded Fusionex International in 2009, transforming it from a local data-analytics startup into one of Southeast Asia’s leading AI and analytics firms. The company specialized in building software that helped businesses visualize and interpret data—years before “big data” became a buzzword in Malaysia.

Under Ivan’s leadership, Fusionex became a symbol of Malaysian innovation, winning government contracts, regional awards, and a reputation for intellectual rigor. Soft-spoken and intensely focused, Ivan cultivated an image of humility and professionalism.

Fusionex grew rapidly, even listing on London’s AIM Market in 2012 before delisting in 2017 to pursue private expansion. Its clients included multinational corporations and government agencies.

That success drew Hitachi’s attention. In April 2020, the Japanese conglomerate acquired Fusionex for US$117 million (RM 545 million) through a new subsidiary, FusioTech Holdings.

Hitachi hailed Fusionex as “a market leader providing state-of-the-art, data-driven platforms with more than 11,000 SME customers across Asia.” The goal was ambitious: grow the customer base to 60,000 SMEs by FY2023 and make Malaysia the hub of Hitachi’s digital business in Southeast Asia.

Few could have predicted that, barely three years later, this partnership would collapse into one of the most damaging corporate breakdowns in Malaysian tech history.

The Petition That Shook the Industry

On 22 December 2023, Malaysian business weekly The Edge broke the story of Hitachi’s winding-up petition. It painted a picture of a company in disarray—its leadership vanished, its systems locked, and its finances opaque.

The High Court swiftly appointed Deloitte Restructuring Services PLT as interim liquidators on 27 December, citing the urgency of the situation. The formal hearing of Hitachi’s petition is scheduled for May 2024, but few doubt that Fusionex, as Malaysians knew it, is already gone.

Industry observers describe it as a collapse without precedent in Malaysian tech. Fusionex’s offices remain quiet, its once-ubiquitous billboards around the Klang Valley fading reminders of what was.

A Profitable Company, Suddenly Insolvent

Fusionex’s fall is perplexing because its numbers looked solid. Audited by EY Malaysia, the group recorded RM 533 million in revenue for FY 2021, RM 647 million for FY 2022, and RM 833 million for FY 2023.

Hitachi’s winding-up petition, however, alleges that behind those glossy figures lay financial irregularities, poor transparency, and questionable transactions that placed the company “in the zone of insolvency.”

According to corporate lawyers familiar with the filing, Hitachi could have submitted a routine winding-up application but instead delivered a meticulously detailed chronology of irregularities, possibly laying groundwork for future legal action against Ivan Teh and his senior team for breach of fiduciary duties.

A Breakdown in Trust

Hitachi’s documents outline a 15-month period of escalating tension. What began as a standard internal audit request in August 2022 evolved into a standoff between the Japanese parent company and its Malaysian management.

Hitachi conducts audits of its subsidiaries every three years as part of risk-management policy. When it informed Ivan Teh that Fusionex’s audit was due in March 2023, his team resisted, citing a mysterious “government directive” that allegedly prohibited sharing sensitive data with foreign entities.

Repeatedly, Hitachi requested access to Fusionex’s financial data, customer lists, and bank statements. Each time, Ivan’s leadership team invoked the same “directive,” refusing to share information—even with Hitachi’s own directors and audit committee.

When Hitachi’s lawyers finally viewed the supposed directive during a meeting in Kuala Lumpur, they discovered it was merely a general advisory letter reminding companies to comply with Malaysian data-protection laws. It did not restrict sharing information with corporate owners or directors.

For Hitachi, this was a turning point. It concluded that the Fusionex leadership was obstructing oversight under false pretenses.

Missing Files, Vanished Records, and Mass Resignations

By the time Hitachi sent its executives to Malaysia to assume control, they encountered chaos.

The company’s new CEO, Hiroyuki Kumazaki, found that:

• Cabinets in the finance department were emptied, with accounting records missing.
• Company laptops had been wiped clean of data.
• There was no comprehensive list of customers or suppliers.
• Even employee contact details were unavailable; the new team had to compile email addresses manually.

To make matters worse, from September to November 2023, at least 110 employees had resigned or been retrenched without the board’s knowledge.

A senior secretary reportedly refused to hand over her laptop to the new CEO and only complied after formatting it, erasing all prior data.

Hitachi described these acts as “unethical and irresponsible business conduct.”

The Suspicious Transactions

Among the few ledgers recovered, dated 5 July 2023, Hitachi’s auditors discovered a series of “suspiciously voluminous transactions” labeled as software-development costs or technology fees paid to two entities: V-Circle MY Sdn Bhd and Convedge Sdn Bhd.

Convedge, founded in 2010, is a big-data company, while V-Circle, incorporated in 2022, promotes itself as an AI-powered SaaS platform serving B2B clients. Industry insiders say both firms employed former Fusionex engineers, raising questions about potential links to Ivan Teh.

Large sums were routed through Fusionex’s Singapore and Macau subsidiaries, further complicating the audit trail. While no public proof ties Ivan to these companies, Hitachi flagged the transactions as potential diversions of funds.

From Warning Signs to Financial Crisis

Tensions escalated when Ivan informed Hitachi in September 2023 that Fusionex’s revenue had plummeted sharply. A month later, on 27 October, he warned that the company would soon fail to meet its financial obligations unless it retrenched staff or received a massive capital injection of US$100–150 million.

This revelation blindsided Hitachi. The parent company had received no prior indication that Fusionex was struggling, let alone facing insolvency.

On 13 November 2023, Ivan and Managing Director Jacob Isaac traveled to Japan to present a “recovery plan.” This time, the requested funds were justified as investments to “strengthen R&D,” not to prevent bankruptcy.

Hitachi’s executives, alarmed by shifting explanations, demanded detailed financial data, joint approval over bank transactions, and the appointment of additional Hitachi nominees to the board. Ivan’s team rejected all these conditions, again invoking the phantom “government directive.”

Within weeks, the relationship collapsed entirely.

Hitachi’s Legal Counterstrike

By December 2023, Hitachi concluded that Fusionex management had abandoned their fiduciary duties and placed the group in jeopardy. The Japanese parent filed a comprehensive winding-up petition citing:

• Refusal to provide financial disclosure.
• Abrupt mass resignations of senior executives.
• Missing corporate records.
• Possible breaches of Malaysia’s Companies Act 2016, specifically Section 245, which requires companies to maintain accurate records explaining their financial position.

Hitachi told the court that Fusionex was “potentially insolvent and unable to continue carrying on its business.”

Lawyers suggest the petition’s extraordinary level of detail signals Hitachi’s intention to pursue further legal action against the directors once a liquidator reviews the evidence.

Shock and Fallout Across Malaysia’s Tech Scene

The reaction across Malaysia’s innovation ecosystem was immediate.

“This is catastrophic for confidence,” said one industry leader. “Fusionex was the flagship of our enterprise software sector. If this can happen to them, foreign investors will think twice before buying Malaysian startups.”

Another CEO described the alleged behavior as “a betrayal of corporate ethics”, adding that senior executives owe fiduciary duty to the board and cannot hide behind imaginary directives.

Indeed, Hitachi owned 100 percent of Fusionex’s shares and had five non-executive directors on the board, alongside Ivan Teh and CFO Chen Chiang as executive directors. Any obstruction of oversight, lawyers note, could expose management to civil and criminal liability.

A Legacy in Question

For more than a decade, Ivan Teh was one of Malaysia’s most admired entrepreneurs. His disciplined demeanor and emphasis on research and development earned him respect even among competitors.

Now, his silence speaks volumes. Since the scandal broke, Ivan has made no public statement despite repeated requests for comment.

Some former colleagues urge caution, suggesting that “there are truths, half-truths, and untruths” surrounding the story. “Give Ivan some space,” one ex-executive told DNA. “When the dust settles, we’ll know more.”

But the dust shows no sign of settling. The court-appointed interim liquidators must now investigate Fusionex’s financial health and submit a comprehensive report. Their findings will determine whether Hitachi proceeds with further legal claims.

Collateral Damage: Clients and Staff in Limbo

The implosion has left clients—including major government agencies—in uncertainty. One agency executive said a former Fusionex project manager had personally reached out to assure them their platform would “continue running smoothly,” though it was unclear through which entity support would come.

Hitachi itself may struggle to assist customers; without access to contracts or contact lists, its ability to maintain Fusionex’s systems is limited.

Meanwhile, many former Fusionex employees have migrated to V-Circle or other startups, taking their expertise—and possibly key intellectual property—with them.

Legal and Ethical Implications

Corporate lawyers note that Fusionex’s case raises critical questions about governance in cross-border acquisitions.

1. Due Diligence Gaps: Did Hitachi underestimate cultural and managerial risks when allowing Ivan full control post-acquisition?
2. Corporate Oversight: Should multinational acquirers place stronger internal controls immediately after a buyout?
3. Professional Accountability: If proven, the management’s actions could invite sanctions from professional bodies for breaching fiduciary duties.

Under Malaysia’s Companies Act 2016, directors are legally obligated to act in the best interests of the company and its shareholders. Violations can lead to personal liability, fines, and even imprisonment.

The Broader Impact on Malaysia’s Startup Ecosystem

Beyond the immediate corporate fallout, Fusionex’s collapse risks damaging Malaysia’s reputation as a reliable tech investment destination.

The country has long positioned itself as a hub for digital innovation, supported by government agencies such as MDEC. International investors often cite Malaysia’s educated workforce and strong legal framework as advantages.

Now, the Fusionex saga threatens that perception. “Investors might see this as a governance red flag,” warned one ecosystem leader. “Transparency is everything. If a global brand like Hitachi can’t get information from a Malaysian subsidiary, smaller investors will think twice.”

Others, however, argue that the crisis could be a wake-up call, prompting stricter oversight standards for both local founders and foreign acquirers.

What Happens Next

The High Court’s next hearing in May 2024 will determine whether Hitachi’s winding-up petition proceeds. If approved, a permanent liquidator will replace Deloitte’s interim team, take control of Fusionex’s assets, and possibly initiate recovery or legal actions against former directors.

For Hitachi, the goal appears two-fold: protect its reputation and recoup losses from what it views as managerial misconduct. For Ivan Teh, the stakes are existential. His credibility—and his future in Malaysia’s tech ecosystem—depend on how, or if, he chooses to defend himself.

Conclusion: From Star Entrepreneur to Corporate Cautionary Tale

In less than four years, Fusionex transformed from a proudly Malaysian success story into a cautionary tale of governance failure. The company that once promised to propel Malaysia to the forefront of artificial intelligence now lies in legal limbo.

Whether Ivan Teh’s downfall stems from mismanagement, misunderstanding, or misconduct, the case underscores a painful truth: in technology as in any business, trust and transparency are worth more than innovation itself.

The Fusionex story is not just about one company’s implosion; it is a test of how Malaysia’s corporate ecosystem responds to failure, accountability, and reform. For now, the world watches—and waits—for Ivan Teh to finally break his silence.

Written by

Nancy Drew

Updated

3 months ago