This article first appeared in The Edge Malaysia Weekly on May 2, 2022 - May 8, 2022

THE surprise change of guard at the Securities Commission Malaysia (SC) last week certainly caught the public’s attention, considering the issues the regulatory body faced while imposing capital markets laws recently. Last Thursday, SC executive chairman Datuk Syed Zaid Albar tendered his resignation, just six months into his second three-year term.

He isn’t the only one quitting. The SC confirmed on Friday an earlier report on the same day by theedgemarkets.com that three other senior officials would also be leaving, namely managing director Foo Lee Mei, executive director and general counsel Chee Fei Meng, as well as executive director of digital strategy and innovation Chin Wei Min.

Foo, who previously served as the SC’s general counsel and later chief regulatory officer, tendered her resignation on April 6, the SC said in a statement. Chee, meanwhile, decided not to renew her contract, which expired on April 15, it added. Chin submitted his resignation on April 28 despite having just renewed his contract in January this year.

For Syed Zaid, 67, his contract extension on Nov 1, 2021, indicated that the corporate lawyer by training had wanted to stay in the post at least until November 2024. Neither the SC nor Syed Zaid, however, divulged the reason for his abrupt resignation.

In a statement issued by the SC that confirmed the news, Syed Zaid thanked the people in the regulatory body, while noting that “their integrity, professionalism, and dedication were tested and proven many times as they ceaselessly worked to ensure the stability and continuity of the capital market”.

The departures came on the heels of a controversial decision by the Attorney-­General’s Chambers (AGC) to withdraw criminal charges that were filed by the SC against Serba Dinamik and four of its top executives for allegedly falsifying financial statements in relation to the company’s record high revenue of RM6.01 billion for the 12 months ended Dec 31, 2020.

Apart from the accounting issues at Serba Dinamik, another notable case the SC handled recently was the proxy stock trading investigation into the share trading account of Malaysian Anti-­Corruption Commission (MACC) chairman Tan Sri Azam Baki in January.

At the time, a local paper reported that MACC also initiated investigations into the SC after receiving a complaint of alleged corruption among several senior individuals at the financial regulator.

The SC announced that Syed Zaid’s position will be filled by Datuk Dr Awang Adek Hussin, former deputy finance minister and ex-Umno supreme council member, effective June 1. He will be the first SC chairman who has served as a politician.

The SC also announced that its executive director of intermediary and fund supervision Yew Yee Tee has been appointed to succeed Chee as general counsel. Concurrently, its head of institution supervision Shamsul Bahriah Shamsudin will take over Yew’s role as director of intermediary and fund supervision.

The criminal charges filed by the SC against Serba Dinamik and its executives in December carried a jail term of up to 10 years and compound of up to RM3 million each.

The four individuals are CEO and group managing director Datuk 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.

When the AGC accepted a letter of representation by the accused and dropped the charges, it meant the accused would skip the full trial and potential jail time. While the AGC has the discretionary powers to do so, there have been calls from the public for the chambers to explain the decision.

The AGC’s decision marked an abrupt end to the efforts by the SC to bring the accused to trial, following an investigation that was initiated in mid-2021.

Instead, the parties were compounded by the SC at the highest quantum of RM3 million each, with Muhammad Hafiz compounded an additional RM1 million for falsifying the accounting records of Serba Dinamik’s subsidiary.

The investigation was initiated after Serba Dinamik’s then auditor, KPMG, raised several audit red flags involving RM4 billion in sales, inventories and transactions, and several unidentified counterparties.

The total damage is yet to be officially verified, and Bursa Securities on Friday decided to lift the trading suspension on Serba Dinamik shares on May 9.  The counter was suspended on Oct 22 last year when Serba refused to reveal the updates of its special independent review (SIR) by special auditor Ernst & Young Consulting Sdn Bhd.

It is unclear whether regulators have initiated any action to address the fact that the four compounded individuals have remained on the board and management of Serba Dinamik, which is currently facing winding-up petitions from creditors after defaulting on its bonds late last year.

Datuk Dr Awang Adek Hussin, who joins the SC on June 1, is a prominent Umno figure in Kelantan. The economist by training served as Umno Kelantan treasurer in the early 2000s and later as Umno Bachok division chief.

Awang Adek was the first Umno candidate to win the seat of Bachok in GE11, where he served as member of parliament (MP) from 2004 to 2008. However, he failed to retain the seat in the subsequent general elections, up until GE14.

The 66-year-old served as deputy finance minister from 2009 to 2013 under two prime ministers, Tun Abdullah Ahmad Badawi and Datuk Seri Najib Razak.

Prior to that, he was deputy rural and regional development minister in 2004-2006. Before that, he served in Bank Negara Malaysia from 1985 until 2001, where he last held the post of assistant governor.

Among other senior roles Awang Adek has held was the chairman of Mara, chairman of Tenaga Nasional Bhd, Malaysian ambassador to the US, and first director-general of the Labuan Offshore Financial Services Authority (LOFSA).

He graduated from Drew University in New Jersey, the US, in economics, and pursued his PhD at Wharton School, University of Pennsylvania.

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