This article first appeared in The Edge Malaysia Weekly on October 25, 2021 - October 31, 2021

Last Friday afternoon, Bursa Malaysia suspended the trading of Serba Dinamik Holdings Bhd’s shares and warrants “in the interest of maintaining an orderly and fair market in the trading of Serba’s securities”.

According to Bursa’s announcement, Serba Dinamik had undertaken a special independent review (SIR) on Sept 30 after external auditors KPMG flagged more than RM4.54 billion in questionable transactions in May this year.

The SIR was undertaken by Ernst & Young Consulting Sdn Bhd (EY), which was appointed in July.

Bursa adds that the outcome of the findings was communicated to three of the company’s four independent non-executive directors on Oct 21, but Serba Dinamik made no announcements on the matter.

This resulted in Bursa issuing a directive to Serba Dinamik to make an announcement on the findings, announce Bursa’s directive immediately and suspend trading on its stock “until an announcement in compliance with these requirements is made”.

Bursa goes on to say the action is “to ensure material information is disclosed in a timely manner and to provide clarity to the market”.

There could be other issues as well.

If Serba Dinamik’s officials were aware of the findings by the SIR on Sept 30 (and we have to assume the findings were negative), why were some of the directors trading its stock after that?

While acquiring shares in the company, managing director Datuk Abdul Karim Abdullah has been disposing of more than 107 million warrants for a total of RM4.3 million in recent days.

Datuk Awang Daud Awang Putera, who is a non-independent non-executive director, has been trimming his stake while his counterpart Datuk Abdulk Kadier Sahib has been buying shares in the company.

If the directors knew about EY’s findings, it looks like Serba Dinamik’s management and board may have to grapple with other issues as well and not just its accounts.

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