The devastation Serba Dinamik suffered due to the abuse of Qualified Privilege that fuelled negative publicity with unsubstantiated allegations of fraud and financial transgressions - Full

By Pearlwhite 24^th December 2021 7.38PM Updated (27^th December 2021 7.50PM)

Ever since the revelation of audit discrepancies by KPMG 7 months ago, Serba Dinamik had incurred significant reputation and financial losses.  Its results for the 1^st quarter of 2021 for the period ended 30^th September 2021 were the lowest achieved since its debut into the Malaysian Stock Exchange in 2016.

We have witnessed in the article “Serba Dinamik’s fruits of labour to the truth is getting closer” how misinformation rhetoric had been used to conduct a trial by social media on Serba Dinamik.  This was intentionally executed by withholding the actual facts, developments and un-completed findings of the Special Independent Review (SIR) from the public.

The abuse Qualified Privilege

In the article “Serba Dinamik’s financials are free of financial transgressions and fraud”, it was shown with facts, reason, methods and evidence derived from KPMG’s management letter and Bursa Malaysia’s Originating summons, that Serba Dinamik could not have committed Fraud and Financial Transgressions (FAFT).

However, misinformation rhetoric by intentionally withholding the actual facts, developments and un-completed findings of the SIR  tantamount to an abuse of Qualified Privilege because it had led to the perpetuation of rampant unsubstantiated claims of FAFT, manipulation with malice leading to negative publicity that hindered Serba Dinamik to continue as a going concern.

The abuse of qualified privilege was further aggravated when a particular media company made a conviction to decide the direction that Serba Dinamik should take and dictate how the capital market should function with respect of the SIR.

Without proper fact checking by independent media until recently, a particular media company was successful in misleading its audience, the public and the court of public opinion.  In other words, a particular  media company was effectively encouraging unsubstantiated claims of FAFT, contempt for Serba Dinamik and negative publicity for Serba Dinamik.

Unsubstantiated claims of FAFT

When misinformation rhetoric is relentlessly used, one of the undesired consequences are revelations of unsubstantiated claims of FAFT.  These claims are continually being perpetuated in discussion boards, forums, responses in social media and trending #hashtags.

Considering that these claimants had so much source material (as they have claimed), it would have been easy to submit such facts, reasons, methods or evidence used to commit FAFT.  For the past 7 months, every possible opportunity and encouragement were availed to claimants to provide facts, reasons, methods or evidence to support their claims.

Nevertheless, the claimants gave no answer; not even 1 fact, reason, methods or evidence.

Why?  Because being indignant (outraged) about claims of FAFT is not evidence of FAFT i.e., the claimants did not have any but contempt for Serba Dinamik.

The consequence of this is that one is denied the opportunity to cross-examine them.  This means zero probability of determining the veracity and credibility of such claims.  Bear in mind, the capital market regulators are also denied of this opportunity too.

This is deliberate manipulation with malice.

Contempt for Serba Dinamik fuels negative publicity

When manipulation with malice leads to contempt for Serba Dinamik, it will invariably suffer negative publicity and reputational loss.  Such contempt continues to be evidenced with the endless cycle of

1. Spreading of misinformation for contempt for Serba Dinamik
2. A myriad of unsubstantiated allegations of FAFT on Serba Dinamik
3. Insinuation that the Board and Management of Serba Dinamik were deceptive, malicious and were due for incarceration
4. Insinuation that Serba Dinamik will not continue as a going concern
5. Seeking to harm, intimidate, or coerce those who wish to engage to eliminate confusion and/or seek clarity and
6. Seeking to harm, intimidate, or coerce those who wish to those who provided facts, reason, methods and evidence contrary to unsubstantiated allegations of FAFT.

Again, this was further exacerbated when a particular media company made a conviction to decide the direction that Serba Dinamik should take and dictate how the capital market should function with respect of the SIR because it implied that Serba Dinamik acted with deception by not disclosing the SIR and hence led to further contempt for Serba Dinamik.

Negative publicity is the result of contempt for Serba Dinamik

Serba Dinamik’s CEO Dato’ Karim had opined that certain financial institutions had ceased banking facilities and certain business partners of Serba Dinamik had stopped collaborations or business ventures that had been agreed on because of negative publicity.

On the other hand, numerous rating agencies for Serba Dinamik’s bond had also downgraded the ratings of Serba Dinamik’s bonds twice because of negative publicity.

Serba Dinamik ability to continue as going concern due to negative publicity

Accordingly, this resulted in Serba Dinamik achieving a poor 1^st quarterly result for 2021 since its debut into the Malaysian Stock Exchange in 2016 and will not be the last.

In a separate affidavit filed by Serba Dinamik’s then chairman, Mohammed Ilyas, certain financial institutions have ceased banking facilities due to the negative publicity.  These facilities amounted to nearly RM3 billion.   Such facilities were essential for day-to-day operations of Serba Dinamik, executing client and new client contractual obligations and financial obligations. 

The loss of RM3 billion of banking facilities had also caused Serba Dinamik to fail to meet its bi-annual interest payment to its bondholders in November 2021 and that further resulted in additional downgrading of its Bond rating by numerous rating agencies.

* In respect of the article, it is recommended that you consult with a Certified Accountant/Chartered Accountant/Chartered Internal Auditor, Chief Financial Officer, Legal Counsel and/or Tax Advisor for advice concerning the article.

It is not recommend that consultations be made with Certified Financial Analyst, Brokers, Traders and/or MBA/MA Finance Graduates as they are deemed not to have the necessary competency and skills to evaluate and advise on such matters discussed in the article.