KUALA LUMPUR (Sept 9): Transmile Group Bhd's founder and former CEO Gan Boon Aun is appealing against his conviction by the Sessions Court for furnishing misleading financial statements to Bursa Malaysia in 2007.
The prosecution is also appealing against the sentence imposed on Gan, as it seeks a heavier sentence.
This was confirmed by the prosecution when contacted by theedgemarkets.com.
Gan, 59, was ordered to pay a fine of RM2.5 million and serve one day in jail after being found guilty of the charge that he, as the director of Transmile, with intent to deceive, furnished a misleading statement to Bursa Malaysia with regard to the financial statements for the financial year 2006.
In an immediate statement after the verdict was announced on Aug 27, the Securities Commission Malaysia (SC) said it would be recommending to the public prosecutor to appeal against the sentence.
The SC recounted that it had accused Gan of overstating Transmile’s revenue “to give the impression that the financial performance of Transmile was in line with market expectations when in fact it was not”.
“The SC also claimed that Gan had played a key role in inflating Transmile’s revenue by creating fictitious sales transactions between Transmile Air Services (TAS) and 20 purported customers. TAS is Transmile’s subsidiary and biggest revenue contributor,” it stated.
The deputy public prosecutor, during mitigation, had requested the court to impose a RM2 million fine and a custodial sentence of between 18 and 24 months.
Once a darling stock on Bursa Malaysia, Transmile was caught in an Enron-esque accounting scandal in 2007 after auditors concluded that the results for the financial years ended December 2005 and 2006 were grossly overstated.
Transmile suffered losses of RM126.3 million instead of making a profit of RM157.5 million in 2006. In 2005, it chalked up losses totalling RM369.6 million instead of the RM84.4 million profit that was reported.
After a tumultuous chain of events, the chartered air-freight service company was categorised as a Practice Note 17 company in 2010, and was eventually suspended and delisted from Bursa Malaysia in 2011.