SC executive chairman tenders resignation six months after three-year extension

Saturday 20 Apr 2024

KUALA LUMPUR (April 28): Datuk Syed Zaid Albar has tendered his resignation as the executive chairman of the Securities Commission Malaysia (SC), just six months after his term was extended for a three-year period.

Sources who confirmed this said it was no surprise that Syed Zaid, a corporate lawyer, has decided to quit, given what has happened in the past month.

His early exit from the country’s top financial market regulator comes on the heels of a controversial decision by the Attorney-General’s Chambers (AGC) to withdraw criminal charges against troubled oil and gas services company Serba Dinamik Holdings Bhd and four senior executives, who were alleged to have filed false financial statements with the stock exchange.

The individuals are chief executive officer 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.

Following investigations by the SC and with the initial consent of the AGC, they were charged on Dec 28, 2021, accused of submitting a false statement in relation to Serba Dinamik’s record high revenue of RM6.01 billion for the 12-month period ended Dec 31, 2020.

But, in a surprise turn of event early this month, the AGC decided to withdraw the charges following a letter of representation by the accused. The AGC has not publicly explained its decision.

This left the SC with only the option to issue compound fines and it did so on April 12, imposing the maximum fine allowed of RM3 million each against the company and the four individuals, with an additional RM1 million against Muhammad Hafiz.

Industry watchers say the case was the biggest corporate fraud by a company listed on Bursa Malaysia and the AGC’s decision was questioned by corporate and investor groups like the Malaysian Institute of Corporate Governance (MICG) and the Minority Shareholders Watch Group (MSWG).

Notably, the SC on Saturday (April 23) filed a police report against Serba Dinamik after the company released a 26-page statement questioning the regulator’s motives to press charges against the company, whose former auditor had raised red flags about its financial accounts. Serba Dinamik accused the SC of threatening the company’s staff.

The police report by the SC accused Serba Dinamik of issuing malicious and misleading statements.

Syed Zaid, 67, has served as the SC chairman for nearly three years and six months.

He was appointed on Nov 1, 2018, and his reappointment from Nov 1, 2021 was approved by Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

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.

The audit matter was first raised by Serba's external auditor KPMG in May 2021 and involved over RM4 billion in sales, inventories and transactions, and several unidentified counterparties. Later, a special independent review (SIR) was conducted by Ernst & Young Consulting Sdn Bhd under Bursa’s directive.

However, Serba Dinamik ignored a court order to reveal the October 2021 factual finding update (FFU) of the SIR. The stock exchange sued Serba Dinamik for contempt of court on April 14.

Bursa has suspended the trading of Serba Dinamik shares since Oct 22 last year amid the company’s refusal to release the FFU.

Since the accounting-turned-legal fiasco, Serba Dinamik’s performance has turned south and it booked its first-ever losses in the second half of 2021.

The company also defaulted on the coupon payment of its two US-dollar sukuk of US$222.22 million maturing in 10 days (May 9) and US$180.12 million respectively.

Holders of its other RM100 million sukuk — also maturing next month — have declared an event of cross-default as well, with rating agencies warning earlier this month of potential cross-default of Serba Dinamik’s other long-term banking facilities.

There has been no update by Serba Dinamik on any action taken by its lenders following the matter.

Edited ByKathy Fong

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