AMMB Holdings Bhd’s RM2.83 billion settlement with the government for outstanding claims related to 1Malaysia Development Bhd (1MDB) has put a huge dent on the value of shares held by minority shareholders, said a corporate watchdog group.

Minority Shareholder Watchdog Group (MSWG) CEO Devanesan Evanson also said that bank executives who caused the settlement should also be held accountable.

He suggested that a portion of the settlement be recovered from them if they are found to be culpable.

“For minority shareholders, the settlement puts a huge dent on the value of their shares both in terms of share price and future stream of dividends,” Devanesan told The Malaysian Insight.

“That is why, MSWG feels that those who have caused the settlement to take place, whether directors or management, should be held accountable; there must be accountability,” he added.

The Finance Ministry said in a statement dated February 26 announced the settlement under which the banking group will pay the amount to settle all outstanding claims and actions in relation to its involvement in the 1MDB scandal.

Ambank Group will pay the settlement in addition to a RM53.7 million penalty imposed by Bank Negara Malaysia.

Devanesan said financial penalties and settlements imposed on the bank will only hurt the shareholders – whose only mistake was voting in the wrong directors.

“The company is not a natural person but only a legal person; it has no mind or emotion to commit wrongs,” he said.

“It is the alter egos in the driving seat of the company who commit wrongs; and it is they that should be held accountable.

“In law, a company can sue and be sued; penalties and fines can be imposed on a company,” he added.

He said AMMB has indicated that it has reserved its rights to take action against those whose actions, or omissions, would have contributed to the settlement.

On the settlement itself, Devanesan said it must have been reached after both parties had been advised by professionals such as lawyers.

“Going to open court will take time and money and the franchise value of AMMB would have been affected. The protracted drawn out court cases would also have distracted management’s focus which is to run the bank profitably,” he said.

“In their wisdom, the board of AMMB probably thought that it is better to settle the amount, put it behind them and move forward.

“They probably did not relish the idea of being involved in a tussle with the government,” he added.

Following the news of the settlement, AMMB’s share price fell by 11.39% – from RM3.16 on February 26 to RM2.80 on March 3 before rebounding.

A week after the settlement with AMMB, the Finance Ministry announced that it has reached an out of court settlement amounting to RM324 million with Deloitte PLT to settle all claims pertaining to the firm’s role as the auditor of the accounts of 1MDB and SRC International Sdn Bhd.

This had followed US investment bank Goldman Sachs’ RM15.8 billion settlement with the Malaysian government in July over the Wall Street titan’s role in the 1MDB affair.

The settlements are part of the government’s efforts to recover from various parties funds and assets directly or indirectly linked to the investment fund. – March 18, 2021.