KUALA LUMPUR: Transmile Group Bhd founder and former chief executive officer Gan Boon Aun and former executive director Khiudin Mohd are set to have their appeal against charges brought by the Securities Commission Malaysia (SC) heard soon, eight years after the duo were charged on July 12, 2007, for making a misleading statement in the company’s quarterly report.

If convicted, Gan and Khiudin could face a minimum fine of RM1 million or imprisonment of up to 10 years, or both.

This follows yesterday’s dismissal by the Kuala Lumpur High Court of another appeal by two former independent directors of Transmile, who had earlier been sentenced to jail for one year and fined RM300,000 for authorising a misleading statement made in the same quarterly report, which was submitted by Transmile to Bursa Malaysia in February 2007.

Shukri Sheikh Abdul Tawab and Jimmy Chin Keem Feung were both convicted in the Sessions Court in 2011 for authorising the furnishing of the misleading statement to the exchange in Transmile’s unaudited consolidated results for the fourth quarter of the financial year ended Dec 31, 2006 (4QFY06), which was likely to induce the purchase of securities of Transmile by other people.

In a statement yesterday, the SC said Shukri and Chin were at the material time members of Transmile’s audit committee and board of directors.

The regulator said however, the case against Gan and Khiudin, who were executive directors of Transmile at the material time, is currently pending in the Court of Appeal.

“Both [of the] accused were on March 22, 2011 called to enter their defence after the close of the prosecution case. However, the case has been stayed, pending the disposal of the appeal in the appellate courts,” the SC added.

Gan, Khiudin and Transmile’s former chief financial officer Lo Chok Ping were charged on July 12, 2007, with abetting the company in making a misleading statement in its 4QFY06 report.

The trio then claimed trial to committing the offence at Bursa Malaysia here between Feb 28, 2006 and Feb 15, 2007.

Transmile, once a stock market darling whose investors included tycoon Robert Kuok and Pos Malaysia Bhd — and its former chairman was former transport minister and former Malaysian Chinese Association president Tun Dr Ling Liong Sik — saw its fall from grace in 2007, after it was revealed that its stellar results were due to massive accounting irregularities.

The irregularities unravelled when auditor Deloitte & Touche refused to sign off the final accounts because it was doubtful of Transmile’s receivables. The board of Transmile led by the Kuok Group then appointed Moores Rowland Risk Management to conduct a special audit, which uncovered huge discrepancies in the receivables.

The auditor concluded that the results for FY05 and FY06 were grossly overstated.

In FY06, Transmile’s losses were RM126.3 million instead of a profit of RM157.5 million. In FY05, its losses were RM369.6 million instead of a profit of RM84.4 milllion as reported.

In 2010, Transmile slipped into Practice Note 17 category, and its securities were suspended and delisted in 2011.

Meanwhile, the SC said Shukri and Chin have had their appeal against their sentence dismissed by the Kuala Lumpur High Court yesterday, which during the trial saw 11 witnesses being called by the prosecution, while both of the accused testified when their defence was called.

“Justice Datuk Mohd Azman Husin, in upholding the conviction and sentence imposed by the Kuala Lumpur Sessions Court, stated that the prosecution had established the ingredients of the offence, and that the appellants had failed to cast a reasonable doubt on [the] prosecution’s case,” said the SC.

The judge also affirmed the sentence imposed by the Sessions Court on Shukri and Chin, which was imprisonment for a term of one year and a fine of RM300,000 (in default of six months’ imprisonment).

The Sessions Court on Oct 28, 2011 found the duo guilty under Section 122B(b)(bb) of the Securities Industry Act 1983 for having authorised the furnishing of the misleading statement to Bursa.

This article first appeared in digitaledge Daily, on September 18, 2015.