A new class of saboteurs?


  • Business News
  • Saturday, 17 Oct 2015

The Penal Code provides for financial sector sabotage. Let’s see how it works

MANY of us learnt something surprising early this week – that our law explicitly says it’s an offence against the state to even try to undermine the financial sector. How many of us thought it likely that this large and sophisticated segment of the economy can be vulnerable to the actions of a few saboteurs or just one?

But we now know that the Penal Code provides for such a thing.

On Monday, former Batu Kawan Umno division vice-chairman Datuk Seri Khairuddin Abu Hassan and his lawyer, Matthias Chang, were charged under Section 124L of the Code, read with Section 34, for attempting to sabotage Malaysia’s banking and financial systems.

(Section 34 states that when several persons commit a crime, each of them is liable for that act in the same way as if he acted alone.)

The two men were accused of jointly committing the offences at the Paris Police Station; Charing Cross Police Station, London; Switzerland Attorney-General’s office, Bern; Wai Chan Police Station, Hong Kong; and Cantonment Police Headquarters, Singapore, between June 28 and Aug 26. If convicted, they may be sent to prison for up to 15 years.

In a press release issued on Tuesday, the Attorney General’s Chambers says it can’t divulge any facts about the cases as they are pending before the court. As such, it is not clear what exactly Khairuddin and Chang have done that’s regarded as potentially harmful to our banking and financial systems.

It has been reported that Khairuddin had gone to the authorities in those countries with complaints and information relating to 1Malaysia Development Bhd. Whether or not this has something to do with the charges the two men are facing, the cases are intriguing because for the first time, somebody has been hauled into court for trying to hurt the country’s ability to provide banking and financial services.

In fact, until three years ago, the Penal Code did not have a Section 124L, which is within a chapter on offences against the state.

That change took effect in July 2012 as part of a number of amendments to the Code so that it is aligned with the Security Offences (Special Measures) Act 2012 (Sosma). The amendments deal with organised crimes, activities detrimental to parliamentary democracy, sabotage and espionage.

The Sosma has replaced the Internal Security Act 1960. According to the Attorney General’s Chambers, the Sosma is “a procedural law that provides special measures to facilitate the investigation and prosecution of security offences”.

Back to Section 124L of the Code. It says, “Whoever attempts to commit sabotage or does any act preparatory thereto shall be punished with imprisonment for a term which may extend to fifteen years.”

The Code has several definitions for sabotage, but in the context of the charges against Khairuddin and Chang, sabotage refers to an act or omission intending to cause harm to the maintenance of essential services. Which, of course, leads to the next question: What are essential services?

The Code lists 13 categories of such services. Banking and financial services are among them, along with the likes of water, electricity, public health, fire, prison, postal, telecommunication, radio communication and public transport services.

However, the Code doesn’t explain what sort of actions or omissions can cause harm to the maintenance of banking and financial services.

So where do we go to get a better understanding of what constitutes banking and financial sabotage that threatens national security?

Our central bank seems to be a logical place to start. But the Financial Sector Blueprint 2011-2020 and Bank Negara’s Annual Report 2014 don’t mention sabotage at all. Search for that word on the Bank Negara web portal and all you get is a tender document that came out at least eight years ago for the central bank’s financial museum and art gallery project.

Singapore’s Penal Code has a chapter on offences against the state, but it doesn’t incorporate any references to sabotage or the financial sector.

There are few examples of acts that can be easily recognised as sabotage of the financial sector. One that has been discussed often is the threat of cyberattacks that target computer networks of banks and other institutions in the sector.

In June last year, Bulgaria was the scene for what might be a fascinating example of an attempt to destabilise the banking system.

After two of the country’s biggest banks had been hit by panic withdrawals, the authorities arrested individuals suspected of spreading rumours about the health of Bulgarian banks via text messages, emails and social media.

Calling the attack “an outbreak of rumours and malicious public statements”, the Bulgarian central bank said, “Such criminal actions are directly aimed against the savings of every Bulgarian citizen and against the financial stability as a key element of the national security of the country.”

The central bank then proposed that the country’s Penal Code be amended to specify an offence – the dissemination of misleading or false information or any other information about any bank or financial institution that may cause commotion and fear in the population.

But it should be pointed out that the Bulgarian banking crisis was more than about rumour-mongering. It also involved allegations of embezzlement, corporate intrigue and a toxic cocktail of business and politics.

All these have nothing to do with the charges against Khairuddin and Chang. That means we have a lot more to learn as the court cases unfold. And we can be sure that the rest of the world will be watching too.

Executive editor Errol Oh tries to pay attention when the authorities apply new laws.

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