No let-up in crackdown by SC


By B.K. SIDHU

The Securities Commission (SC), which has prosecuted 110 people for various corporate offences since its inception in 1993, is currently investigating several new cases that could lead to similar action. 

SC deputy chief executive Datin Zarinah Anwar said the number of individuals against whom action had been taken had risen more than three-fold to 86 in the past five years (1999 to 2003) from 24 in the preceding five years. 

Last year alone, 11 people were charged in new cases, nine were fined, one was jailed, and seven cases were compounded. A year earlier, 22 people were prosecuted, four jailed, eight fined, and 13 cases compounded. 

Datin Zarinah Anwar

“We are currently investigating several new cases involving various crimes, from fraud, provision of misleading information to insider trading. A lot depends on the evidence we get from our investigation for us to take the appropriate action,’’ Zarinah told reporters after addressing a seminar on Enforcement of Corporate Governance for APEC Economies jointly organised by the SC and the Australian High Commission in Kuala Lumpur yesterday. 

She declined to elaborate on the cases being investigated, but stressed the commission would not hesitate to prosecute both directors and non-directors of companies if there was enough evidence of their wrong-doing. 

Laws and codes of governance alone would not prevent corporate offences without effective enforcement, she said. 

“Effective enforcement poses an obvious challenge to regulators and enforcement agencies; it requires not only adequate human skills and financial resources, but also the will to act,’’ she added. 

Asked if the SC was beefing up its enforcement division in view of the rise in the number of cases, Zarinah said: “We can do with additional resources, (although) we already have a sizeable enforcement team that undertakes investigations and prosecution of cases, and we have had many successes.’’ 

She added that the SC also ensured that the skills and competence of its officers were continually upgraded so that they were more able to deal with the very complex cases that arose all the time. 

As for the trend in securities-related offences, she said there was a clear shift in the nature of criminal cases, from short-selling which fuelled the crisis in the stock market to trading offences such as market manipulation and insider-trading, disclosure-related offences, fraud and corporate governance-related offences. 

Examples of corporate governance-related offences are the provision of false or misleading information on proposals/dealings in the securities or affairs of a company; fraud involving directors or management; misuse of issue proceeds; breach of conditions imposed by the SC for approval of proposals; and trading offences involving directors or the management. 

But Alan Cameron, a speaker at the seminar, said Malaysia scored well versus some of its neighbours in terms of corporate governance, as revealed in various surveys conducted thus far. 

Earlier, in her speech, Zarinah said although there were significant reforms being undertaken across the board within the region to keep pace with global standards, the progress had been uneven with some economies achieving significant advances and others adopting a more incremental approach. 

“I think it is important for us all to keep in mind that serious efforts must be taken to ensure that corporate governance practices meet the challenges brought upon by the rapid integration of economies and the intensity of competition,’’ she said. 

Zarinah said corporate failures and misconduct inevitably would adversely affect confidence, leading to the departure of investors to seek investment opportunities in jurisdictions where probity was not undermined, and duties and obligations attached to stewardship were not subordinated to the dictates of greed and expediency.

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