Last week, three China-based companies — China Stationery Ltd (CSL), Xingquan International Sports Holdings Ltd and Maxwell International Holdings Bhd — were found to have furnished false or misleading financial statements to Bursa Malaysia. The companies and key officials were rapped and fined by Securities Commission Malaysia (SC) but is the punishment commensurate with the wrongdoing?
In the case of Xingquan, executive chairman and CEO Datuk Wu Qingquan, executive director Wu Lianfa, former non-independent non-executive director Ng Sio Peng and former senior independent non-executive director Zhou Li Yi were reprimanded for falsely recording a loss of RMB415.7 million from the sale of inventory by Xingquan’s wholly-owned subsidiary, furnishing false agreements to Bursa between the said subsidiary and a third party, and recording cash and bank balances in eight bank accounts collectively belonging to Xingquan that were false or misleading. The four were also fined RM3 million by Bursa.
In Maxwell’s case, the company, its president and executive director at the material time Li Kwai Chun, independent non-executive director Su DeMou and former CFO Tan Swee Song were reprimanded for recording in its financial statements a payment of RMB45.6 million by Maxwell’s wholly-owned subsidiary, which was false or misleading information.
Former CEO and executive director Xie Zhenan, was also reprimanded for furnishing false or misleading financial statements to Bursa.
But why were they only given public reprimands and fines when company officials have been hauled to court and convicted for furnishing false statements and submitting misleading information?
When do wrongdoers get off with a rap on the knuckles, or end up in the dock?