Saturday, October 09, 2010

Lack Of Punishment For Corporate Crimes!

On Star Business: Too little punishment for too much

Several points to highlight:

  • Now, the scale of the offence becomes much clearer. Ngu used RM15.5mil to finance his purchase of shares in Pancaran Ikrab and caused RM37mil to be transferred out of the company, making in all a massive RM52.5mil.
    And all he got was a day’s jail and a fine of RM2mil. Why? And there was nothing said about restitution or return of the monies.

A day jail and a fine of 2 million for an offence worth rm 52.5 million???

  • In March this year, the Kuala Lumpur Sessions Court convicted Chan Kok Suan, the former managing director of Granasia Corporation Bhd for submitting false statements to the Securities Commission as part of the application for an initial public offering.
    Chan was convicted under section 32B(4) of the Securities Commission Act and was fined RM500,000, in default 10 months imprisonment, according to the SC.

And then the fiasco!

I could be wrong but I felt it was important because Mems Technology was highly regarded by the local brokerage houses. All of them gave the stock a high recommendation.

In the posting MEMS Told To Correct Its Financial Statements!, I noted that ".. by overstating its earnings by a mere 8 million, based on market capital, Mems managed to value itself 531 million. ". Mems on the date of that posting, on 28th Oct 2009, has a market capital of a mere 42 million!"

The punishement?

  • In February, the Kuala Lumpur Sessions Court convicted Ooi Boon Leong and Tan Yeow Teck for knowingly authorising the furnishing of a misleading statement by MEMS Technology Bhd, a company listed on the then Mesdaq market, to Bursa Malaysia Securities Bhd.
    The Sessions Court sentenced each accused to a fine of RM300,000 (in default two years imprisonment).

rm300,000 fine each????


And the Star Business article then highlights..

  • Last November, the Securities Commission secured a conviction against Datuk Tan Hooi Chong for abetting Kiara Emas Asia Industries Bhd in the misappropriation of the rights issue proceeds amounting to almost RM17mil between Dec 16 and 31, 1996.
    Tan pleaded guilty to the offence under section 32(6) of the Securities Commission Act 1993 read together with Section 40 and Section 109 of the Penal Code. Tan had also admitted to misutilising the rights issue proceeds for his personal benefit. He was fined RM600,000.

And the Star Business then compares to another case.

  • But let’s look at another case. In March, former Perbadanan Komputer Nasional Bhd chief executive officer Zulkifli Amin Mamat was sentenced to four years’ jail and three strokes of the rotan for criminal breach of trust involving RM1.61mil.

WOW! I agree with Star Business Managing editor P. Gunasegaram when he raises the following issue...

  • Why the anomaly? Is criminal breach of trust very different from what these other directors were doing?

Yes why?

Would you agree with P.Gunasegaram that the punishment for the directors is way too little?

Gunasergaram then continues...

  • That must mean, if we take other more sinister conclusions out of the equation, that judges don’t seem to understand the seriousness of corporate crime and the extremely deleterious effects they have on the capital markets and thousands and millions of shareholders of public-listed companies.

    The only way that such lack of understanding or otherwise can be overcome is for the Chief Justice, Tun Zaki Azmi, himself to step in. Zaki has been working tirelessly to reduce backlogs and has taken strong, controversial steps in this direction. But the lack of punishment of corporate crime is one area that demands immediate attention too.

    It will be no exaggeration to say that the future of the country depends on it because no country has been able to reach the pinnacles of progress and achievement without a healthy corporate sector. And you can’t have that without adequate punishment of the bad hats.

Yeah... I am wondering of Megan Media's case.

Ok, there was some 'sort' of punishment .... in the posting Megan: Are You Shocked By The Light Sentence For The Accounting Fraud Commited?

  • Kok pleaded guilty for helping public-listed Megan Media Holdings Bhd submit false revenue figures of over RM1 billion in its 2006 accounts. He also admitted to three other outstanding charges.

    For the offences, the Session Court fined Kok, who was the personal assistant to MMHB executive chairman then, RM350,000 on August 18 to be paid the next day in default of a year's imprisonment.

    The SC had earlier urged the Sessions Court to mete out a deterrent sentence.
    In a statement yesterday, the SC said the fraud had a significant impact on MMHB's share price as it dropped 85 per cent over three months after the news of false statements became public.

    "Kok had played a key role in the creation of fictitious invoices to support the false revenue figures."

    Several financial institutions had also been deceived into giving trade facilities which were then used to resemble payments for fake sales, it added

The Personal Assistant to the Executive Chairman was fined rm 350,000. That's all.

And what about the boss??? Yes what about that Mr. George Yeo Wee Siong????!!!!!

A fine of rm 350,000 was simply ludicrous!

Totally unaccecptable given what had happened!

Let's recall... sigh. Posted The Naked Truth in Megan in July 2007.


Ok, Megan posted that Megan Media posts RM1.14b net loss in 4Q.

I have decided to have some fun in spotting the differences between
yesterday's Quarterly rpt on consolidated results versus their previous quarterly earnings reported on March 2007.

I will state the current one first followed by the previous quarter.

1. Sales revenue. 21.417 million versus 306.150 million.

2. Property & plant. 101.939 million versus 588.601 million.

3. Investment in associate. Zero versus 67.502 million.

4. Inventories. 26.355 million versus 125.090 million.

5. Trade receivables. 13.601 million versus 430.354 million.

6. Other receivables,deposits and prepayments. 12.891 million versus 260.787 million.

7. Total assets. 163.441 million versus 1.511 billion!

8. Accumulated losses of 1.041 billion versus retained earnings of 262.545 million.

9. Total Equity-(Deficit) of 796.963 million versus total equity of 506.963 million.

10. Net Asset per share of -3.92 versus Net Asset per share of 2.50.


Megan Media cooked up their whole book!


Let me explain... If you look at the comparison figures as posted, for example, point 2 reads: "2. Property & plant. 101.939 million versus 588.601 million."

This meant that Megan told the investing public their property and plant was worth 588.601 million.

Actual fact was it's only worth some 101.939 million!

Everything on the left, represented the actual audited numbers, while the right showed how insanely high everything was cooked up!

In short, Sales revenue figures was artificially boosted, value of their property and plant, investment amount in associates, stock inventory, trade receivables and deposits, receivables and prepayments were all false!

Yeah, he admitted guilty in submitting false revenue figures of over RM1 billion in its 2006 accounts!

And the fine? rm 350k?????

So what about George Yeo Wee Siong? Suit Filed Against 2 Megan Officials

  • The SC also said it had obtained a warrant of arrest for former executive director George Yeo Wee Siong.
    “The SC is seeking the assistance of Interpol to trace and arrest George Yeo, who is wanted for similar charges,” the statement said.

See also Probing corporate Malaysia


ronnie said...

Thank you Moola for keeping this injustice alive. We really should appoint you Chairman of SC. All the idiots are asking why foreigners are not investing in Malaysia. The weak legal system is definitely a major deterrent to investing in this country.