PETALING JAYA: There is an urgent need to put market integrity at the top of the country’s agenda.
The call grows even more resonant amid the “corporate mafia” allegations made against the Malaysian Anti-Corruption Commission (MACC) recently.
This is more so key in sustaining investor confidence, including foreign investors at a time when there is high competition for foreign direct investments (FDIs) around the world with the ringgit still recovering from its multi-year lows.
Earlier in the month, Bloomberg published two expose news articles on the MACC, which also implicated its chief commissioner Tan Sri Azam Baki.
One of those reports by Bloomberg titled: Who’s Watching Malaysia’s Anti-Corruption Watchdog? – had, citing evidence, detailed on incidences of a number of businessmen, who have attempted to oust founders of Malaysian companies and sometimes seize control of the company by partnering some key officials at the MACC.
Azam has since denied the allegations and filed a RM100mil lawsuit against the international news outlet while Bloomberg has stood by its reporting.
“This is quite serious as Bloomberg is a well respected global media house referred to by fund managers, institutional investors and foreign investors who may want to invest in the Malaysian market.
“These allegations will create fear and a lack of confidence towards the integrity of Malaysian markets,” said a fund manager.
“For a long time Malaysia, along with Singapore, is considered quite well governed. With stories of the corporate mafia now being able to take over some companies with video evidence – if this is proven to be true it will be very detrimental towards the Securities Commission (SC) and Bursa Malaysia’s work over the years,” the fund manager added.
Experts say the rule of law must be upheld to sustain investor confidence – and this is key to maintain the country’s competitive edge for continued FDI and domestic investor flows.
Similarly on the other side of the globe, there are also plans in the United States to pass the Stop Insider Trading Act which US President Donald Trump yesterday said will ensure that members of Congress cannot “corruptly profit” from using insider dealings.
Back home, company executives say that this latest issue which implicates the MACC needs to be addressed wholesomely with the help from market regulators such as the SC and Bursa Malaysia.
These regulatory bodies can also play a key role in order to strengthen market integrity and transparency, the executives say.
The executives also say that the issue has been going on for many years with some complaints being filed before noting that the market regulators does have the power to deny any suspicious director appointments under the ‘fit and proper’ criteria.
“There is a layer of protection there and they can be blocked by the SC under their current regulatory powers. But sometimes we are seeing people who are named as corporate mafias still being placed as board members,” a company director told StarBiz.
“It is possible the regulators are apprehensive. And if so, the SC should be given the powers of enforcement, not just charging in the courts alone.
“Their powers should be similar to the Inland Revenue Board of Malaysia which can seek the freezing of bank accounts first, while appeals (if any) can be done at a later stage,” the director added.
Syndicates, whom are now being called “corporate mafia” can use the authorities to pressure and steal a company – including control it and pushing up its share price – or this is also known as “pump and dump”.
“This has been going on for many years. They didn’t involve the authorities at such scale before, and if they did, the person was usually down the chain – at the lower levels.
Back in 2018, a top official at Bursa Malaysia had been splashed with acid with police sources saying it was likely linked to the official’s corporate surveillance work.
“This is done by the syndicate and they are involved with the corporate mafia. People at Bursa and SC do work hard, but their lives can be under threat as well,” a source said.
Another fund manager said that this development can potentially affect foreign fund allocations with a case in point in Indonesia where the MSCI Inc raised concerns over tightly-held ownership of listed firms.
“An issue of low liquidity and opaque structure was enough to raise this concern. This, if proven to be true, would see the impact being far reaching and will be hard to quantify at this juncture.
“For minority shareholders protection, this is something that Bursa and SC as well as the Minority Shareholders Watchdog Group has been trying to champion, particularly for small and medium capitalised companies to improve transparency and disclosures,” the fund manager said.
