AFTER over a six-month long suspension and the date of its trading resumption (May 9) nears, the Malaysian Bar has dropped a bombshell by stating that the mere issuance of compounds towards Serba Dinamik Holdings Bhd sets a dangerous precedent.

While it is mindful of the immense authority wielded by the Attorney-General (AG), the professional body which regulates the profession of lawyers in Peninsular Malaysia is of the view that such power must be exercised in a way that would promote and strengthen the rule of law.

“With due respect, the Attorney General Chambers of Malaysia (AGC) should refrain from making a decision that overrides the recommendations made by the regulator – in this case, the Securities Commission (SC) – as this could potentially erode the function as well as the public perception vested in the regulator,” opined its vice-president Mohamad Ezri Abdul Wahab.

“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, according to the Malaysian Bar, 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,” Mohamad Ezri stressed in a media statement.

“One of the core objectives of securities regulations is to foster a fair market system, thereby instilling confidence in investors and shielding the market from systemic risks. To achieve this, regulators who are exercising their statutory duties must be given the liberty to enforce law and regulations against wrongdoers. “

It was reported that in December 2021 that the global integrated oil & gas (O&G) outfit and four of its senior officers were charged in court for submitting a false statement to Bursa Malaysia which is an offence under section 369(a)(B) of the Capital Markets and Services Act 2007 (CMSA).

Under section 369(a)(B) of CMSA, if convicted, a person faces an imprisonment term not exceeding 10 years and shall also be liable to a fine not exceeding RM3 mil. The imprisonment term demonstrates the severity of such a charge.

However, on April 13, the SC with the written consent of the public prosecutor and pursuant to its powers under Section 373(1) of CMSA, compounded Serba Dinamik and its accused officers for a sum of RM3 mil each.

Its vice president of accounts & finance, Muhammad Hafiz Othman, was further compounded an additional RM1 mil for falsifying the accounting records of the company’s subsidiary.

This follows the decision of the public prosecutor to accept the representation made to the AGC by Serba Dinamik and the individuals involved.

Given the chain of events, Mohamad Ezri expressed concerned with the lack of transparency in this matter given the wider impact that the Serba Dinamik compound has on the integrity of the capital market’s governance and 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,” he pointed out. “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 are reached.”

As such, Mohamad Ezri implored the AGC to make a full and frank disclosure on the reason, if any, for the issuance of compounds to Serba Dinamik and the accused individuals, instead of proceeding with prosecution.

“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 added.

On April 17, the Minority Shareholders Watch Group (MSWG) also expressed concern that the offering of compound may create a dangerous precedent.

“It has been observed that some charges of a lesser degree in the past were not compounded but went on to trial with resultant jail terms. We must be mindful of the message that we are sending to the capital market and potential wrongdoers,” noted its CEO Devanesan Evanson.

MSWG also urged the AGC – in the interest of transparency – to “lift the veil of its absolute discretion and explain the reasons” for its decision.

Serba Dinamik was last transacted at 35 sen at the close of the mid-day trading on Oct 22 last year prior to the trading suspension of its shares/warrants, hence giving the company a market capitalisation of RM1.3 bil. – May 7, 2022

https://focusmalaysia.my/malaysian-bar-laments-ag-merely-giving-serba-a-slap-on-the-wrist/