KUALA LUMPUR (May 6): The Malaysian Bar has reproached the Attorney-General’s Chambers' (AGC) usage of authority to compound Serba Dinamik Holdings Bhd and four top executives, instead of proceeding with the prosecution of the accused parties.

In a statement, Malaysian Bar vice-president Mohamad Ezri Abdul Wahab said that while the professional body is cognisant of the AG’s authority, he noted that such authority should be utilised to promote and strengthen the rule of law.

“The Malaysian Bar is mindful of the immense authority wielded by the AG. Such powers are granted under Article 145(3) of the Federal Constitution, which provides the AG with the discretion to institute any proceedings for an offence.

“It is our view that such power must be exercised in a way that would promote and strengthen the rule of law. With due respect, the AGC should refrain from making a decision that overrides the recommendations made by the regulator — in this case, the SC (Securities Commission Malaysia) — as this could potentially erode the function as well the public perception vested in the regulators,” he said.

Mohamad Ezri highlighted that a core objective of securities regulators is to foster a fair market system and to achieve this, regulators must be given the liberty to enforce the law and regulations in exercising their statutory duties.

“The manner in which this matter has been handled and resolved undermines the capital market regulators’ commendable efforts to uphold the integrity of the market. 

“Such leniency is likely to create a negative perception of selective enforcement by the authorities and that the decision of the regulators can be overruled. It is our view that the considered opinions of the market regulators — in this case, the SC and Bursa Malaysia — should be preserved and executed accordingly,” he added.

The statement referred to the AGC’s decision to accept representation from Serba Dinamik and the four officers, which led to the accused being compounded for a collective RM16 million by the SC.

To recap, following investigations by the SC and with the initial consent of the AGC, Serba Dinamik in December last year was charged under Section 369(a)(B) of the Capital Markets and Services Act 2007, while the four officers — namely chief executive officer and group managing director Datuk Dr Mohd Abdul Karim Abdullah, executive director Datuk Syed Nazim Syed Faisal, group chief financial officer Azhan Azmi, and vice president of accounts and finance Muhammad Hafiz Othman — were charged under Section 369(a)(B), read together with Section 367(1) of the same Act.

But in an unexpected turn of events early last month, the AGC decided to withdraw the charges following a letter of representation by the accused. The AGC has not publicly explained its decision so far.

As a result, the SC is left with the option to issue compound fines and it did so on April 12, imposing the maximum fine allowed of RM3 million each against the company and the four individuals, with an additional RM1 million against Muhammad Hafiz.

The accused parties, if convicted, faced a term of imprisonment not exceeding 10 years and a fine not exceeding RM3 million.

Malaysian Bar calls for transparency on compound issuance

Mohamad Ezri stressed that the Malaysian Bar is also concerned with the lack of transparency of the AGC’s decision, considering the significant impact on the integrity of the capital market’s governance and the regulatory framework.

“At the time of writing this press release, the AGC has yet to provide any statement for its decision not to prosecute Serba Dinamik and the accused officers. 

As this is a case of public interest, there is a need for the AGC to provide details of how the decisions in such cases were reached,” he added.

The Malaysian Bar vice-president called for the AGC to disclose the reasons behind its decision to issue compounds to Serba Dinamik and the accused officers, instead of proceeding with prosecution.

He also noted that the AGC should engage in a “purposeful consultation process” with the regulators to ensure the proper penalties are enforced.

“The old adage rings true now more than ever — ‘Justice must not only be done, but must be seen to be done’," he said.

https://www.theedgemarkets.com/article/malaysian-bar-warns-agc-serba-dinamik-compound-sets-dangerous-precedent