KUALA LUMPUR (April 24): The Securities Commission Malaysia (SC) has rejected Serba Dinamik Holdings Bhd’s allegations that the regulator had acted in bad faith against the oil and gas company and had not followed procedures in discharging its duties.
“As the statutory body mandated by Parliament to regulate the Malaysian capital market, the SC is charged with the responsibility of maintaining trust and confidence in the capital market.
“Its enforcement action against Serba Dinamik was undertaken in the public’s interest, to promote the integrity and reliability of financial statements of public listed companies.
“The SC denounces any attempts to intimidate the SC or its officers and undermine its authority and credibility,” the regulator said in a statement on Sunday (April 24).
The statement comes a day after the regulator lodged a police report against Serba Dinamik over the company’s announcement on Thursday, which included a 26-page filing, that the SC said “contained statements that are baseless and malicious, and which may have the effect of misleading or confusing members of the public and/or paint a negative image of the SC and its officers”.
theedgemarkets.com reported on Saturday that the SC lodged the police report at the Jalan Travers police station.
In its statement, the SC said it lodged the report to enable the police and other relevant authorities “to investigate the matter, including for the offence of defamation under Section 499 of the Penal Code and/or other relevant laws”.
It also sought the police’s cooperation to conduct its investigations with urgency to help safeguard investors’ interest.
Serba Dinamik and four of its board members and senior management were earlier charged for offences under securities laws in December 2021 for providing a false statement to Bursa Malaysia Securities Bhd in relation to Serba Dinamik’s revenue figure of RM6.01 billion contained in its consolidated results for the quarter and year ended Dec 31, 2020.
Following Serba Dinamik’s representation to the Attorney-General’s Chambers, the attorney-general had on April 7 this year agreed for all the charges to be compounded.
The SC noted in its statement that the bulk of the allegations made by Serba Dinamik against the regulator were issues and arguments put forward in various High Court proceedings filed by Serba Dinamik, which have since been dismissed by the court.
“In this regard, the SC wishes to state that investigations regarding this matter was conducted in accordance with its statutory powers and established processes and procedures, and categorically rejects the claims by Serba Dinamik as being without any merit,” it said.
The SC denied that it failed to hand over documents relating to this case, saying “substantial” documents, which will be tendered by the prosecution during trial, were in fact provided to Serba Dinamik pursuant to Section 51A of the Criminal Procedure Code (CPC).
It said the documents were provided in separate batches on Jan 27, Feb 25 and April 8.
The SC also clarified that the exercise of its investigation powers, including the raid conducted at Serba Dinamik’s office on May 18, 2021, was proper and executed in good faith in the discharge of its regulatory powers.
“Pursuant to Sections 128 and 133 of the Securities Commission Malaysia Act 1993, the SC is empowered to enter any premises without a search warrant if it has reasonable grounds to believe that the delay in obtaining a search warrant may cause any documents or evidence to be interfered with or destroyed or the object of the entry may be frustrated,” it said.
The SC also said its investigating officers, prosecuting officers and deputy public prosecutors had not at any time threatened any staff of Serba Dinamik.
“Statements recorded from these witnesses were conducted according to due process and the statements were made to the SC voluntarily without any inducement, threat or promise,” it added.
In its announcement on Thursday, Serba Dinamik, which is embroiled in an audit dispute, questioned and sought further explanation from the SC regarding its motive to bring charges "only against selected directors and persons who were not directors" but not against the entire board, in what is alleged to be false revenue of RM6.01 billion for the financial year ended Dec 31, 2020 (FY20).
The company asked SC to provide documents showing how the RM6.01 billion revenue was recorded in the company's ledgers, how such entries led to false statements and wondered how the FY20 revenue figure alone could have been manipulated in the company's fourth quarter results announcement, as it was the cumulative revenue for the four quarters of the year.
Serba Dinamik also alleged that the SC had threatened the company's staff by offering them to act as witnesses against the company and its management, saying that the SC told the group’s relevant staff that they would not be charged by the SC if they accepted the offer.
In addition, the company questioned the SC for the ongoing investigation by the regulator, although the charges have been made.
Since end-May last year, Serba Dinamik has been battling the SC, Bursa, its former auditors KPMG and even Ernst & Young Consulting Sdn Bhd, which was commissioned to conduct a special independent review of the company and disclose factual finding updates highlighted by KPMG.
Last December, the SC filed charges against Serba Dinamik's directors and officers for providing false information to Bursa, an offence under Section 369(a)(B) of the Capital Markets and Services Act 2007 (CMSA), and obtained an arrest warrant for the company's chief executive officer and group managing director Datuk Mohd Abdul Karim Abdullah.
Earlier this month, Serba Dinamik and its four top executives, including Mohd Abdul Karim, were compounded RM3 million each by the SC. Serba Dinamik’s criminal charges were framed under Section 369(a)(B) of the CMSA, while the four individuals were made under Section 369(a)(B) of the CMSA, which carries a maximum jail term of 10 years and a maximum fine of RM3 million if one is convicted of the offence.