T. GOPAL was charged under section 380 of the penal code for stealing and sentenced to three days’ jail and fined RM1,200 for stealing infant formula for his two children in Seremban in January 2017 in Seremban.
Chong Ann Ni was also charged under the same section of the penal code for stealing diapers and infant milk powder for her baby in Kuala Lumpur in June 2019. She was sentenced to 10 days’ jail.
Meanwhile, the attorney-general said in a statement yesterday that criminal charges should not be brought against Serba Dinamik Holdings Bhd due to the “economic consequences” of such an action, which could cost company employees their jobs and go against the interests of shareholders and the creditors.
It was economic consequences that drove the first two people to commit theft. They did not do it to benefit financially but to feed their children.
Even though section 380 does not provide a compound, the magistrate has the discretion to hand down a punitive sentence on the offenders.
The AG appeared to contradict himself when he said that compounding the offences was adequate punishment for Serba Dinamik’s alleged offences while allowing the company to focus on fixing its “errors”
The charges against the company proffered by the Securities Commission are not for errors but offences under the CMSA 2007. Errors can be explained away and do not result in the regulator charging the alleged offenders.
As for jeopardising the interests of shareholders, their interests were already jeopardised from the moment the spat between the company and its earlier auditor, KPMG, was first made public.
The list of the company’s institutional investors comprise some top international names such as California Public Employees’ Retirement System, Blackrock Institutional Trust Company, Blackrock Advisors, Dimensional Fund Advisors, Vanguard Group Inc, State Street Global Advisors US, Norges Bank Investment Management. These institutional investors are audited the highest ranked audit firms in the world.
Merely compounding the offences will destroy the confidence of the institutional investors in the integrity of the financial reporting system in our capital market system and the rule of law.
Unless the government is of the view that participation of foreign institutional funds in the local capital market is insignificant, this justification given by the AG will have both immediate to long-term ramifications.
In the developed countries, institutional investors are likely to seek restitutions against a company and its directors if malfeasance and fraud are proved in a court of law. In this particular instance, this recourse is no longer available to them. Would they still continue to invest in our capital market?
Some of the retail investors who bought in when the share price of the company was at approximately RM1.60 in May 2021 could have taken margin loans or mortgaged their assets or homes to take a loan to purchase the shares. Some might have been bankrupted by their investment in the company as their investment is now worth only 10% of what they had invested in May 2021.
The AG might find might the compound is an adequate form of punishment for the company.
What about the individual investors? Where can they seek recourse for their losses?
Some may wish to initiate legal action against the company and the directors for the diminution in the value of their investments if the charges initiated by the regulators had proceeded and the company and the individuals were found guilty.
Instead of protecting the interests of the shareholders, especially the retail investors, again the authorities have left these investors holding the short end of the stick. Investors are consistently let down by authorities and the regulators entrusted to uphold the rule of law and the integrity of the capital market in Malaysia. – May 14, 2022.
* FLK reads The Malaysian Insight.
* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.