Time for firm action against scams

The question in most people’s mind is how such individuals can be given the licence to operate an airline which essentially is responsible for the lives of thousands of passengers daily.

OF late, we have been reading about the MYAirline fiasco, where RM20mil worth of air tickets sold in advance that are now unusable have affected 125,000 passengers.

Many were left without any services due to them following the sudden cessation of operations by the airline company.

As more details came to light, it was further reported that even employees of the airline were owed salaries and statutory contributions for many months.

The irony about this entire episode isn’t so much about the ticket refunds outstanding but the manner in which the airline company just decided to “call it a day” without advance notice to relevant stakeholders.

This was made worse by the subsequent revelations by the media about the controversies surrounding the major shareholders of the company who were allegedly involved in money laundering and illegal deposit taking resulting in a hefty RM50mil fine by Bank Negara.

The question in most people’s mind is how such individuals can be given the licence to operate an airline which essentially is responsible for the lives of thousands of passengers daily.

‘Fit and proper’ test

Every government agency operates differently, and I am not an expert on our country’s civil aviation authorities’ processes and procedures.

However, in my experience being an intermediary regulated by the Securities Commission (SC), the SC with its authority to issue licences regulates the capital market by ascertaining the fitness and propriety of companies and individuals applying for licences.

In considering whether an applicant is fit and proper to hold a licence, the SC considers the factors such as probity, ability to perform functions efficiently, honestly and fairly, financial status, reputation, character, financial integrity and reliability. The standard on “fit and proper” is provided in Section 76(6)(c)(ii) of the Capital Markets and Services Act 2007.

The capital market is highly regulated because it deals with the monies of investors. Regulators enforce strict laws to ensure protection of the investors interests.

While the airline industry does not deal with investors directly, the advance sales of air tickets to passengers results in holding large amount of customers’ monies, which is not unlike banks or fund management companies.

Whether these customers’ monies should be placed in an escrow account of some sort before a company can pocket the money after services are rendered like the Housing Developer Account (HDA) model adopted by the Housing Ministry to protect homebuyers from errant developers is an important question to ponder following the implosion of MYAirlines.

If there was a “fit and proper” test that was adopted when scrutinising the shareholders of the budget airline prior to the issuance of the airline licence, there would be no reason the licence would be granted by the authorities in the first place.

Authorities need to step up

Very often we read and hear in the news about tragic stories of people being victims of scams. It is often after the event, where losses have been incurred and damage caused.

The media will publish the news and there will be outrage from the public. However, somehow it happens again and again until eventually, people start to become immune, and the outrage subsides. The offenders might then be emboldened to continue their unscrupulous acts, and this perpetuates a vicious cycle.

It is how scams in recent years have spread like wildfire. My fund managers and company have been impersonated on many occasions by scammers to dupe the unsuspecting public. We have made multiple reports to the police and the National Scam Centre to the point that even the authorities have told us that we have done everything we can in our capacity as a company to report the scam.

Yet, as of today, we are still receiving phone calls on a weekly basis from a would-be scam victims calling to verify the authenticity of scammers who were impersonating us. Even on messaging-app groups, my phone number on any given day is randomly added to crypto scam groups. The situation is not improving.

In fact, the authorities have the necessary tools and power to put a stop to this. While the argument is no action can be taken if no crime has yet to be committed, preemptive action should be taken at the point of lodging of report. Actions such as the tracing of the “mule accounts” of scam victims, reviews of CCTV footage of individuals withdrawing cash of scam accounts from ATMs or the phone numbers of the WhatsApp and Telegram groups or even IP address of the scam Facebook accounts should be taken.

The answer by some authorities that this has become a societal norm and should be accepted as normal cannot be tolerated. If enforcement isn’t swift and harsh, then the biggest loser would be our economy due to the loss of productivity and outflow of legitimate money to underground shadow economy. There is absolutely no point in crying over spilt milk. Ultimately, it all comes down to how resolute the authorities and regulators intend to be.

Salvaging our reputation

The home minister has stated that the losses to online scams this year are likely to reach RM 1.2 billion by year end. This does not include those unreported and other fraud-related schemes. This social illness should not be underestimated as it can destroy the trust of the people in the authorities. If the people cannot trust the very institutions set up to protect them, the credibility of the institutions will crumble.

I do not believe this is solely a matter of resources. It is the regulatory authorities who have the responsibility to up their game in terms of efforts and know-how. The red flags were all over the place before MYAirline even came into existence two years ago.

Malaysia’s aviation industry has suffered tremendously since MH370. If we want to salvage our country’s reputation and global standing, safety standards, financially troubled national carrier airlines, non-functioning airport transfer railways or controversial airline owners need to be addressed immediately.

The ball can start rolling by first instilling a preemptive risk culture for the authorities followed by assuming accountability from the top leaders when things go wrong. In the grand scheme of things, half-dressed airline bosses receiving massages during work meetings are the least of our concerns at this juncture.

Ng Zhu Hann, is the CEO of Tradeview Capital. He is also a lawyer and the author of Once Upon A Time In Bursa. The views expressed here are the writer’s own.